Euronav must survive to be sustainable, warns De Stoop
‘Diversification has never, ever, ever worked,’ argues Euronav chief Hugo De Stoop as he seeks to secure support for his growth strategy while discrediting CMB’s diversification play
Euronav campaign urges shareholders to vote against Compagnie Maritime Belge’s ‘fundamentally flawed’ diversification strategy ahead of crucial shareholder showdown on March 23
EVERY vote will count on March 23 when Euronav shareholders take a view on the strategic direction of the world’s largest publicly listed tanker company.
While the ballots will ostensibly decide executive board positions, the reality is those decisions will determine who controls the company. Which is why Euronav management have hit the campaign trail this week seeking to shore up support for their own commercial strategy while discrediting those who seek to oust them via a “brutal”, “chaotic”, “backdoor takeover”.
Over a series of presentations delivered on Monday first to shareholders then press, Euronav chief executive Hugo De Stoop pitched a well-rehearsed strategy to deliver further growth, shareholder returns and clear energy transition progress.
Ultimately, however this was about convincing everyone that 25% shareholders Compagnie Maritime Belge are not just wrong for targeting an accelerated decarbonisation and diversification strategy — they will fundamentally damage the company and shareholders’ interests if they are allowed to get their way.
Mr De Stoop accused the Saverys family behind CMB of attempting to take control “on the cheap”, with no premium being offered to shareholders.
He criticised the Saverys’ blockade of the proposed merger with John Fredriksen’s Frontline for eroding potential value from the company and described the proposal to remove the current executive board in favour of non-independent replacements as “brutal” and entirely unnecessary.
The Saverys family plan to diversify the Belgian tanker giant was, he argued, an “incoherent strategy” that “flouts basic governance principles”.
Much of this criticism, of course, is not new in the war of words that has erupted between the two camps. But this latest amplified campaign from Euronav is about reaching every potential vote via any potential channel. Given that the battle for control now effectively revolves around two shareholders, each with 25% of the company, Euronav wants to ensure that it can buck the trend of minority shareholders failing to turn out to vote on such issues.
“I feel like a politician here, but your vote matters,” Mr De Stoop urged during the shareholder call, reiterating the bold campaign messages now found plastered over the front of Euronav’s website.
The various permutations of voting outcomes could variously see the current executive board removed in part, or whole. Or it could see the CMB play dismissed entirely, in which case the question of what happens next is not entirely clear.
“Buying them out is probably not the best use of capital,” conceded Mr De Stoop. “We would need to find other solutions, but every problem has a solution.”
CMB’s 25% position is well understood, but John Fredriksen’s votes, which also represent a 25% stake, are the potential swing factors that will likely decide the outcome of this shareholder showdown and the future of the company with it.
Neither the Saverys family nor Euronav management know what he intends to do and given his silence on the matter so far it seems that his strategy will not be revealed until the vote on March 23.
Having unilaterally pulled Frontline out of the proposed combination agreement with Euronav and suffered the ongoing arbitration battle as a result, the CMB camp are clearly hoping that Mr Fredriksen’s loyalties no longer lie with Mr De Stoop and the current executive board.
Mr De Stoop, however, has a competing theory. He believes that Mr Fredriksen’s history of creating pure-play companies that understand investor appetite and scale means he will lean towards the growth strategy he previously wanted to merge into.
And here lies the crux of Euronav’s pitch against CMB’s “backdoor takeover”.
“Fundamentally, it is about how you manage a company,” Mr De Stoop told Lloyd’s List following a day of campaigning.
“[The Saverys family] are asking shareholders to vote for a sustainable future… you have to understand that the company first and foremost needs to survive to be sustainable.” That, he argued, would not be guaranteed if the CMB vision of Euronav’s future is allowed to go through.
“Diversification has never, ever, ever worked,” he explained, countering CMB’s plan to eventually move Euronav away from being a pure-play tanker company. “Investors hate it — they apply 20%, 30% even 40% discount. It’s just not a good strategy for a public company. It never has been.”
As for the sustainability pitch, Mr De Stoop believes that Euronav is the uncontested environmental, social and governance leader in the tanker market, with clear milestones along its path to net zero in 2050.
“Yes, we are transporting crude oil. But crude oil is not a sunset industry,” said Mr De Stoop.
“It may very well become one in the future, quite frankly, and I think that all of us here at Euronav hope that one day the world will depend far less on fossil fuel, but at the moment it doesn’t, and so we prefer to be the one transporting the oil than to let others do that.”
CMB will argue otherwise, but Mr De Stoop is painting this as a disagreement over timing rather sustainability.
“In terms of decarbonisation, we have a very clear strategy, that not only the way we propel our vessels, but also the cargo that we transport will be changed over time. But now is way too soon and, for the time being, we prefer to be the ones doing that.”