The stock of Gener8 Maritime Inc (NYSE:GNRT) closed at $6.22 gaining 9.12% in yesterday’s trading session. The all-stock deal struck between Gener8 and Euronav was worth $490 million. The deal was about Euronav’s acquisition of the world’s top oil shipping fleets and this announcement was made on Thursday.
Anyone closely following on the progress of the industry will attest to the fact that quite a significant number of the tanker companies having been going through tough times in the recent months. They haven’t been the best of conditions and as a result numerous complaints have been raised to that effect.
Building on scale as well as the cutting down on costs have been prioritized by quite a significant number of them and that has been in a bid to strike a good balance. Maintaining relevance in the market has become a rather challenging affair to most of them and each has been looking out working strategies.
Back in June, Oslo-listed tanker player Frontline came forward to make an announcement disclosing that it had with immediate effect abandoned its pursuit of New York-listed rival DHT Holdings .The headquarter of Euronav is situated in Belgium and it recently gave a statement outlining that it was going to remain committed to the creation of ‘tangible economies of scale’ It also gave a market capitalization projection of about $1.8 billion.
Paddy Rodgers, the Euronav chief executive said that the new well capitalized combined entity would move quite a long way towards delivering sustainable benefits to its huge number of shareholders.
According to Rodgers, the deal was the perfect opportunity to drive some consolidation in a fragmented sector, where ‘several headwinds’ hit the tanker market. It has been projected that in the next few months the market will be facing a weaker earnings outlook and that will have something to do with the softer demand.
The company’s spokesperson said, “Subject to regulatory and shareholder approval, the deal will result in Euronav shareholders owning approximately 72 percent of the issued share capital of the combined group and Gener8 shareholders owning approximately 28 percent.”