Euronav battle is clash of visions for the future of tankers
At first glance, John Fredriksen’s unwanted advances on the Belgian company are a standard-issue M&A tussle. But the alternatives facing shareholders run deeper than that
Tanker recovery or decarbonisation play? You pays your money and you takes your choice
AT ONE level, Frontline’s merger-cum-takeover battle with Euronav is a run of the mill corporate M&A bunfight between John Fredriksen and the Saverys family, chiefly of interest to those with skin in the game.
At another, it sees the clash of two conflicting visions for the future, which will decisively shape the tanker market as a whole for decades to come.
Six weeks into the battle, the fighting is still very much in war of position mode. But the invaders look to be gaining ground.
The key skirmish this week has been a meeting of shareholders in the target company, which slammed down a call by Saverys-controlled Compagnie Maritime Belge to put three Saverys people on the board.
Ratification of the merger was not up for a vote, but the rejection of nominations is widely being taken as a clear indication that the required majority to push it through is already there. So far, so good for Big John.
Both sides have been on a share-buying binge of late, with Mr Fredriksen’s holding in Euronav now topping 12%, while his opponents have built their stake to just under 20%. Crucially, that leaves the Belgians some way short of what they need to scupper the deal.
Thanks to a complex structure, nobody — not even Euronav chief executive Hugo De Stoop, who backs the merger — can say with precision just how big a blocking minority they would have to muster to put the kibosh on. But the best guess is around 25%.
CMB must have known that its bid to pick up additional directorships was doomed. However, the Saverys family will not have squandered $400m on shares in support of a non-starter strategy, and presumably have further shots in their locker.
Enticing an extra 5% over to their bloc shouldn’t be an insurmountable obstacle, and could yet happen. But there are some big ifs standing in the way of pulling this feat off.
The package already on the table from the Fredriksen side is patently attractive to the non-aligned. If the Saveryses are to fend it off, they need to devise a more alluring proposition still.
For Mr Fredriksen, now 78, this is all about legacy, pure and simple. The plan for Fredriksen Inc has been discernible for some time; merge all the companies in which he has a significant interest to create bigger entities capable of running without his direct input.
By contrast, CMB chief executive Alexander Saverys proceeds from a very different outlook on the way ahead. He dismisses the orthodox assumption that shipping has no agency, and sincerely advocates a generational agenda for decarbonisation.
He wants Euronav to become part of that vision, by joining forces with CMB.Tech, the Saverys’ arm that effectively makes the pace on hydrogen as an alternative fuel, envisaging full decarbonisation by 2030.
“To move now, you need crazy people,” he told a gathering of like-minded progressives attending the Global Maritime Forum in London last year. It was a sentiment that garnered a robust round of applause, including from Euronav’s chief executive.
Calling it crazy may give Mr Saverys’ demand the enticing ring of an era-defining moonshot. But as a rule of thumb, craziness is all too often mad, and his brainchild could more likely prove a financially ruinous radical reinvention.
As the Euronav board put it, the company is “not the appropriate vehicle to underwrite such a venture”.
Mr De Stoop is no dinosaur, nor an enemy of sustainability. He has himself pushed for decarbonisation, and has made some enthusiastic noises about ammonia as an alt fuel.
But given that he is running the show at Euronav, he is obliged to take a view on its best interests. These will inevitably include such considerations as scale and access to capital.
Sacrificing a market-leading tanker fleet for an undetermined environmentally sound prospectus could quite understandably be regarded as tilting at windfarms.
From this distance, the smart money is still on Mr Fredriksen getting what he wants. If, a few years from now, tanker operators are minting it on the same scale as boxship outfits have managed over the last period, everybody goes home happy.
Well, everybody apart from the Saverys family, obviously.