John Fredriksen-controlled tanker owner and operator Frontline has started initial discussion with crude oil tanker firm DHT Holdings for a potential business combination.
Frontline proposed the acquisition of all of the company’s outstanding shares of common stock in a stock-for-stock transaction at a ratio of 0.725 Frontline shares for each DHT share. The proposal is subject to usual and customary conditions for transactions of this nature.
Together with its affiliates, Frontline has also acquired 15,3 million shares of DHT, representing around 16.4% of DHT’s outstanding common stock based upon 93,366,062 common stock outstanding.
“A combination of Frontline and DHT is expected to create the largest public tanker company by fleet size, market cap, and trading liquidity,” Frontline said.
Assuming significant cost synergies are achieved, as well as superior access to debt and equity capital markets, Frontline believes a combined entity would generate significant free cash flow and maximize value for both companies’ shareholders.
However, no specific arrangement has been reached, and there can be no assurance as to the certainty or timing of any potential business combination.