Supertanker deal points to M&A wave

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An oil tanker sails into New York Harbor, in Staten Island, New York City, U.S., March 10, 2022. REUTERS/Mike Segar

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LONDON, April 7 (Reuters Breakingviews) - Norway’s Frontline (FRO.OL) and Belgium-listed Euronav (EUAV.BR) are making an early call on peak oil. The pair said on Thursday they were embarking on a $4.2 billion merger that will control 8% of the world’s crude tanker fleet. There’s scope for more defensive alliances given oil demand is set to fall in the latter part of this decade as the switch from fossil fuels gathers steam.

Despite its billing as an all-share merger, the 10% premium offered to Euronav investors, based on Wednesday’s closing prices, suggests a takeover by the marginally smaller Frontline. Euronav shareholders will also own 59% of the new group, slightly more than their share of the two companies’ undisturbed market value. That gives them a generous slice of savings from head-office job cuts and lower funding costs. Frontline investors, including Norwegian shipping magnate John Fredriksen, still have lots to look forward to. Many of the world’s supertankers are ageing and some won’t be replaced. Years of overcapacity and low tanker rates are slipping into the wake. (By Ed Cropley)

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Editing by Swaha Pattanaik and Oliver Taslic

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