Shares of Belgian tanker giant Euronav jumped more than 16% in morning trading on the New York Stock Exchange on Thursday after the company confirmed talks to sell 24 VLCCs to shipping magnate John Fredriksen for $2.35bn.
The stock price surge reversed losses that had been piling up in US trading since 28 September, when TradeWinds revealed that the transaction was being strongly rumoured in the tanker market.
Euronav shares flew above $17 on Thursday, up from the previous close of $14.77 on Wednesday. Volume was extremely heavy as 8.2m shares had traded by lunchtime against the average daily volume of 1.2m units.
As TradeWinds has reported, the share began a retreat from the 28 September close of $17.48 as the market digested the sales rumours. Euronav fell more than 15% over the past four trading days. The volatility had caused a suspension of the share’s trading in Brussels.
Still, today’s trading level remained below the $18.43 per share that Belgian company Compagnie Maritime Belge is offering to pay Fredriksen’s Frontline for its 26.1% holding. That offer will be extended to all shareholders.
While reasons for the previous selloff in US shares were unclear, some pointed to a research note from Jefferies lead shipping analyst Omar Nokta that was seen as somewhat bearish on the transaction.
“How positive a transaction for minority shareholders remains to be seen: will they be offered a chance to go with Fredriksen/Frontline or remain at a smaller and perhaps less tanker-focused Euronav?” Nokta questioned in a client note.
Now that it’s clear that the offer would be extended, the news appeared to remove an overhang from the stock.
However, Thursday’s trading level still fell below the $18.50 per share Jefferies sees as Euronav’s net asset value.
Frontline shares also were having a good day on Thursday, jumping more than 7% to $18.67 in midday trading. Volume was elevated at 7m shares compared to the daily average of 2.3m.
Frontline’s stock is essentially level with the price before the deal rumours broke.
The 57m shares controlled by Frontline and Fredriksen would make this slice worth $1.05bn, leaving a $1.3bn financing gap.
Euronav’s 66-strong fleet includes 41 VLCCs and 22 suezmaxes, with another four suezmaxes expected to be delivered within the next year.
The market cap was $3.25bn on Thursday. VesselsValue assesses the whole fleet as worth $5bn. It lists 39 VLCCs as worth $3.5bn, plus a couple of VLCC FSOs with no valuation.
