The Belgian family behind the oil tanker company Euronav is opposed to a merger with Frontline

They have sixty-six mammoth tankers together. The Belgian oil tanker company Euronav and the Norwegian competitor Frontline. Forty so-called very large crude oil vessels (VLCC) is from Euronav, which will receive three new giant tankers from South Korea next year. And twenty-three are from Frontline. Each tanker – too large to pass through the Suez Canal – has a capacity of 2 million barrels of crude oil.

Together, the Belgian and Norwegian companies will constitute the largest oil tanker company in the world. With sixty-six VLCCs and a further eighty smaller tankers – which fit through the Suez Canal. The boards of Euronav and Frontline announced on Monday that they have an agreement on a share swap.

In April, both companies unveiled their first merger plans. For every Euronav share listed in Brussels and New York, the shareholders of the Belgian company must now receive 1.45 shares in Frontline. The Norwegian company has stock exchange listings in Oslo and New York. The merged company will be named Frontline, the top man will be the Belgian Euronav’s chairman of the board Hugo De Stoop.

Whether the deal will actually work depends on the wealthy Belgian Saverys family. The shipowner’s family has many business interests in the maritime industry. For example, the family controls the bulk cargo company CMB in Antwerp. Paterfamilias Marc Saverys is the founder of Euronav.

Family: Do not gamble on oil

The Saverys family has steadily declined interest in the oil tanker company in recent years, but has begun buying shares again in recent months. The reason: The family does not like the merger of the company they have made big with Frontline and wants to block those plans. According to the family, Euronav would be better placed to focus on transporting more sustainable fuels instead of focusing on oil.

Against the Flemish business newspaper The time said Alexander Saverys, CEO of CMB and son of Marc: “Adding more oil to an oil company in a world that needs a rapid reduction in greenhouse gases is not a good strategy.” The exclusive focus on fossil fuels and the associated geopolitical risks can even put the company in danger, says Alexander Saverys. The time

The Saverys family now owns nearly 18 percent of Euronav. Frontline, which is owned by the Norwegian shipping magnate John Fredriksen, owns 18.8 percent of the shares in its Belgian competitor. If enough shareholders agree on the merger, Frontline and Euronav will merge, but without an agreement with the Saverys family, the (further) plan to remove the Belgian shipping company from the Brussels Stock Exchange will fail.

Frontline and Euronav emphasize that together they are better able to make the transition to more sustainable shipping. Together, they want to gain a stronger position in the fragmented and highly cyclical oil transportation market. The merged company will have a worldwide market share of between 8 and 10 percent.

2020 was a fantastic year

The financial results of Euronavs and Frontline over the past two years testify to the cyclical nature of tanker shipping. 2020 was a record year for both companies. Euronav had revenue of $ 1.21 billion (€ 1.20 billion) and a profit of $ 473 million. Frontline had slightly more revenue, $ 1.22 billion, but lower profits, $ 413 million. Due to the low oil price, oil producers hired tankers to store their oil in anticipation of better times. Those who operated oil tankers like the Belgian and Norwegian shipping companies did good business.

The decline came in 2021. The corona crisis took hold in tanker shipping, oil-producing countries limited their production. Euronav had revenue of $ 420 million, a third of 2020, and suffered a loss of $ 339 million. Frontline’s revenue was 749 million, just over half of 2020, and a net income of minus 11 million.

Both oil tanker companies are now doing better again. This is mainly due to the Russian invasion of Ukraine. The tankers, which no longer transport oil to Europe due to Western sanctions against Russia, are now sailing longer routes to China and India, among others. And longer routes mean more revenue for the oil companies.

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