Euronav, Gener8 reach merger deal

Tanker operators Euronav NV and Gener8 Maritime have reached an agreement on a stock-for-stock merger that would create the world's largest independent fleet of VLCC tankers.

The move was announced today (21 December) in a joint statement from the Euronav company headquarters in Antwerp, Belgium and Gener8's offices in Manhattan. 

The merger includes the issued and outstanding share capital of Gener8 and when completed would make Gener8 a wholly owned subsidiary of Euronav.

Euronav's statement said combining the two companies' fleets would result in a total of 75 tankers aggregated at more than 18M DWT and joint balance sheet assets of  US$4Bn. 

According to analysis provided by VesselsValue, the new company would become the world's second-largest tanker company after the merger in terms of number of vessels, tonnage and total value.

The VesselsValue database shows the new company with 74 vessels at more than 18M DWT and a current market valuation at US$3.45M. Four new vessels on order push the tonnage over 19M DWT and the valuation to US$3.68M.  

Liquidity for the new company would be more than US$750M, including cash on hand and undrawn amounts available under existing credit facilities.

Under the terms of the deal, approximately 60.9M new Euronav shares will be issued to Gener8 shareholders, with the exchange ratio of 0.7272 Euronav shares for each Gener8 share.

The exchange ratio implies a premium of 35 percent paid on Gener8 shares based on the closing share prices on December 20, 2017.

On closing, Euronav shareholders will own around 72%  and Gener8 shareholders will own 28% of the issued share capital of the of the merged company.

“I have been a vocal advocate for consolidation in the shipping industry and have always stated that we would be a willing buyer or seller, depending upon what is best for our shareholders. This transaction creates the largest independent VLCC fleet in the world,” Gener8 CEO Peter Georgiopoulos said.

The merger is subject to the approval of Gener8’s shareholders and some of its lenders.

A third-party tanker owner has agreed to purchase six VLCCs from the combined entity upon closing of the merger at a price of US$434M, according to Euronav's statement.

“The sale will allow Euronav to maintain sustainable and robust financial ratios and keep leverage and liquidity well within management’s desired levels,” the company said. 

Several other tanker companies have made merger attempts in 2017, although not all were successful.