Blog Coverage DHT Receives Proposal from Frontline to Merge and Create the Largest Public Tanker Company by Fleet Size; Adopts Antitakeover Defense

LONDON, UK / ACCESSWIRE / January 31, 2017 / Active Wall St. blog coverage looks at the headline from Frontline Ltd. (NYSE: FRO) and DHT Holdings, Inc. (NYSE: DHT). On January 30, 2017, Norwegian shipping Company, Frontline, announced that it has approached DHT Holdings with a non-binding proposal for a possible business combination where Frontline would acquire all outstanding shares of DHT’s common stock in a stock-for-stock transaction at a ratio of 0.725 Frontline’s shares for each DHT’s share. Frontline’s proposed ratio of 0.725 of a Frontline’s share for each share of DHT, represented an implied price of $5.09 per DHT’s share, based on the closing price of Frontline’s shares of common stock on January 27, 2017. Register with us now for your free membership and blog access at:

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Frontline stated that together with its affiliates, it has acquired 15,356,009 shares of DHT, representing approximately 16.4% of DHT’s outstanding common stock based upon 93,366,062 common stock outstanding.

The Combination

Frontline stated that a combination of Frontline and DHT is expected to create the largest public tanker company by fleet size, market cap, and trading liquidity. Assuming significant cost synergies are achieved as well as superior access to debt and equity capital markets, Frontline believes a combined entity would generate significant free cash flow and maximize value for both companies’ shareholders.

Frontline stated that its affiliates and/or entities which are indirectly controlled by trusts established by John Fredriksen for the benefit of his immediate family, may at any time, and from time to time, acquire additional shares of DHT or dispose of any or all shares it owns depending upon an ongoing evaluation of the investment in the shares, prevailing market conditions, other investment opportunities, other investment considerations and/or other factors.

The Poison Pill

Before Frontline’s announcement on January 29, 2017, DHT Holdings announced that it has received a non-binding, highly conditional proposal from Frontline.

In light of the developments, DHT’s board unanimously adopted a one-year shareholder rights plan and declared a dividend of one preferred share purchase right for each share of DHT’s common stock outstanding at the close of business on February 09, 2017. The Company stated that these rights will not be exercisable and will trade with the shares of DHT’s common stock.

DHT’s board stated that under the rights plan, the rights will generally become exercisable only if a person or group acquires beneficial ownership of 10% or more of DHT’s common stock (15% or more in the case of passive institutional investors). In that situation, each holder of a right will be entitled to purchase, at the then-current exercise price, additional shares of common stock (or equivalents) having a value of twice the exercise price of the right.

Furthermore, DHT stated that if after a person or group acquires 10% or more of DHT’s common stock (15% or more in the case of passive institutional investors ), if DHT merges into another Company, or an acquiring entity merges into DHT or DHT sells or transfers more than 50% of its consolidated assets or earning power, then each right will entitle its holder to purchase, for the exercise price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice the exercise price.

DHT noted that any person or group that already owns 10% or more of DHT’s common stock on January 29, 2017, including Frontline, will not trigger the rights, however, unless that person or group subsequently acquires additional shares of common stock.

Stock Performance

At the close of trading session on Monday, January 30, 2017, Frontline’s stock price rose slightly by 0.57% to end the day at $7.06. A total volume of 1.35 million shares were exchanged during the session, which was above the 3-month average volume of 1.14 million shares. The Company’s shares are trading at a PE ratio of 6.70 and have a dividend yield of 5.67%. The stock currently has a market cap of $1.11 billion.

DHT Holdings’ stock jumped 7.96%, ending yesterday’s trading session at $4.61. A total volume of 7.87 million shares were traded at the end of the day, which was higher than the 3-month average volume of 2.41 million shares. In the last month and previous three months, shares of the Company have advanced 10.82% and 10.36%, respectively. Moreover, the stock gained 11.35% since the start of the year. The stock is trading at a PE ratio of 69.85 and has a dividend yield of 1.74%. Considering Monday’s closing price, the stock’s net capitalization was at $430.44 million.

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