Norwegian-Cypriot shipping magnate John Fredriksen, who’s working to have Frontline merge with rivaling Euronav, has been buying a lot of shares in US tanker carrier International Seaways. Analysts are puzzled by the purchase.
Norwegian-Cypriot shipping magnate and billionaire John Fredriksen isn’t wasting any time and has in the last weeks of April been buying up in US tanker carrier International Seaways.
These purchases were made through company Famatown Finance, part of Fredriksen’s Seatankers Group, and have occurred while Fredriksen is working to merge his tanker company Frontline with rivaling Euronav.
Fredriksen and Famatown now hold an ownership stake of 16.2 percent in International Seaways, which last year merged with another tanker carrier, Diamond S.
At the same time, Fredriksen owns 11 percent of Euronav’s shares and controls 40 percent of those in Frontline.
Whether Fredriksen is now working to have the heralded merger between Frontline and Euronav joined by another major tanker firm, which sails both crude oil and refined products, is unknown.
Whether this is a financial investment, or another potential merger candidate remains to be seen
Clarksons Platou Securities
”Whether this is a financial investment, or another potential merger candidate remains to be seen,” write Clarksons Platou Securities Managing Director Frode Mørkedal and Associate Even Kolsgaard in a note.
”A Fredriksen adviser told news media that this is a separate and independent investment, and there are no plans to involve International Seaways in the large-scale merger project between Frontline and Euronav.”
However, Clarksons Platou Securities assesses that a merger between the three tanker carriers could be positive if a combined company of the highest possible stock value is what is sought.
Meanwhile, the problem is that the shares of the three carriers are assessed differently. The proposed merger between Frontline and Euronav, which is not fully negotiated, will take place as a share-based transaction based on net asset value (NAV).
”This means, in our view, there is little further upside for [Euronav and Frontline] in merging with [International Seaways],” write the two analysts.
While the Frontline and Euronav stocks trade at NAV, the same does not apply to International Seaways, whose share price only corresponds to 74 percent of NAV in the tanker carrier, as estimated by Clarksons Platou Securities.
”A large-scale merger between three tanker carriers might well be what John Fredriksen wants, but in that case he should think that the first merger between Frontline and Euronav must happen first. Then International Seaways may follow,” an equity analyst tells WPO.
International Seaways already has a tanker pool partnership with Euronav through Tankers International. Frontline has previously been part of the collaboration but withdrew a few years ago, according to WPO’s information.
Euronav share purchasing began last year
Fredriksen started buying shares in Euronav last year, and at first, a potential merger between the carrier and Frontline was denied.
The shipping tycoon’s share purchases provoked a former major shareholder, Belgian shipping family Saverys, to enter the stage.
Although the Saverys family, who had previously taken part in establishing Euronav, had sold their last shares in the listed tanker carrier two years ago, they then started buying new ones.
The family, who own 16.5 percent of Euronav through shipping company CMB, have made no secret of their opposition to a merger with Frontline and are attempting to prevent the joining.
Thus, the Saverys seeks to have three named candidates elected as members of Euronav’s Supervisory Board at the upcoming annual general meeting, set to take place on May 19. The family is working to have Euronav strategically develop in a more sustainable direction than toward a continued endeavor on the crude tanker market.
But the current board at Euronav has gone on the counteroffensive, recommending that shareholders vote against the proposed candidates, and holds that the Saverys family’s proposal to merge Euronav with family venture CMB Tech will destroy shareholder value.
English edit: Jonas Sahl Hollænder
