425: CMB.TECH and Golden Ocean Announce Proposed Stock-for-Stock Merger to Create Diversified Maritime Group

CMB.TECH and Golden Ocean Group Limited have announced a proposed stock-for-stock merger, with CMB.TECH as the surviving entity, aiming to create a leading diversified maritime group.

Summary

• CMB.TECH and Golden Ocean have announced a proposed stock-for-stock merger.
• CMB.TECH shareholders will own approximately 67% and Golden Ocean shareholders will own approximately 33% of the combined entity, excluding treasury shares.
• The exchange ratio is 0.95 CMB.TECH shares for each Golden Ocean share, based on a valuation of $15.23 per CMB.TECH share and $14.49 per Golden Ocean share.
• The combined company will operate as CMB.TECH NV, headquartered in Antwerp, Belgium, with listings on NYSE, Euronext Brussels, and a new listing on Oslo Brs.
• The combined market capitalization is estimated at $3.2 billion with a free float of approximately 40%.
• CMB.TECH's 2024 net profit was $870 million (including capital gains) or $200 million (excluding capital gains), with an EBITDA of $500 million.
• CMB.TECH has a liquidity of $350 million, a contract backlog of $3 billion, outstanding CapEx of $2.2 billion, and a fleet valued at $7.5 billion.
• Golden Ocean's 2024 result was $223 million, based on achieved rates of $27,000 for Capesize vessels and $15,500 for Kamsarmaxes and Panamaxes.
• Golden Ocean has a fleet of 91 ships with an average age of 7.5 years and a market capitalization of around $1.4 billion.
• The combined fleet will consist of over 250 vessels with an average age of six years and a fair market valuation of over $11 billion.
• The combined company's NAV is estimated at close to $15 per share.
• The merger is subject to regulatory approvals and approval by Golden Ocean shareholders at a special general meeting, targeted for July 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the proposed merger, highlighting the benefits of diversification, decarbonization, and value creation. The management's comments and financial metrics support a favorable sentiment.

Positives

• The merger creates a leading diversified maritime group with a large fleet and significant market capitalization.
• The combined company benefits from a strong balance sheet and increased resilience to shipping cycles.
• The merger allows for diversification across different shipping segments, reducing volatility.
• The combined entity will have a modern fleet with a focus on decarbonization and low-carbon fuels.
• The Saverys family will remain a strong anchor shareholder in the new company.
• Golden Ocean's low cash break-even rate of around $13,800 enables sustainable dividends.
• The combined entity will have a large free float, enhancing liquidity and attractiveness to investors.
• The company has a strong focus on value creation for shareholders through diverse, sustainable, and high-quality cash flows.

Negatives

• The merger is subject to regulatory and shareholder approvals, which could introduce uncertainty.
• The container market is expected to be more difficult for the next one or two years.
• The tanker trade is impacted by the global economy and potential tariffs, which could create uncertainty and reduce global GDP growth.
• Intense dry docking period for Golden Ocean in Q1 and onwards will impact results.

Risks

• Regulatory approvals for the merger may face unexpected delays or challenges.
• Economic slowdown and trade tariffs could negatively impact demand in the tanker and dry bulk markets.
• The container market faces potential oversupply and reduced demand, impacting profitability.
• Failure to secure long-term charters at favorable rates could affect revenue and profitability.
• The successful integration of the two companies' operations and cultures is crucial for realizing the expected benefits.
• The volatility of shipping markets could impact the combined company's financial performance.
• The implementation of IMO regulations on carbon emissions could increase costs if the company is unable to transition to low-carbon fuels effectively.

Future Outlook

The combined company aims to create value for shareholders through diversification, decarbonization, and growth, targeting opportunities in the markets and leveraging its large fleet and strong balance sheet.

Management Comments

• Alexander Saverys (CEO, CMB.TECH): 'We want to talk today about the proposed merger of CMB.TECH and Golden Ocean.'
• Peder Simonsen (CEO, Golden Ocean): 'I think we are pleased with the result on behalf of our shareholders of $14.49 per share and look forward to continuing with the process.'
• Ludovic Saverys (CFO, CMB.TECH): 'We believe that combining both companies; apart from the diversification, decarbonisation and growth; I think being large, listed and diversified has an edge in today's capital markets.'

Industry Context

The merger reflects a trend towards consolidation and diversification in the maritime industry, driven by the need for resilience in volatile markets and the increasing importance of decarbonization. Competitors may include other large, diversified shipping groups that are also investing in low-carbon technologies.

Comparison to Industry Standards

• Golden Ocean is the largest listed owner of large size dry-bulk vessels, with a modern and fuel-efficient fleet.
• The combined entity will be among the largest owners of Capesize ships, comparable to COSCO, but with a younger fleet and low carbon solutions.
• The company's focus on ammonia-ready and ammonia-fitted vessels positions it ahead of many competitors in terms of decarbonization efforts.
• The company's dividend payout ratio of 45-62.5% over the past 13-23 years is competitive with other established shipping companies.

Stakeholder Impact

• Shareholders of both CMB.TECH and Golden Ocean will be impacted by the merger, with changes in ownership and potential value creation.
• Employees of both companies may experience changes in roles and responsibilities as a result of the integration.
• Customers will benefit from a broader range of services and a modern, decarbonized fleet.
• Suppliers and creditors will be impacted by the combined company's financial strength and operational scale.

Next Steps

• Obtain regulatory approvals for the merger.
• Sign a merger agreement to make the contract binding.
• File regulatory filings with the SEC, including a prospectus and proxy statement.
• Hold a special general meeting for Golden Ocean shareholders to vote on the merger.
• Continue engaging with customers to offer modern tonnage and low-carbon solutions.
• Monitor and adapt to changes in shipping market dynamics and regulatory landscape.

Key Dates

Keywords

merger, CMB.TECH, Golden Ocean, maritime, shipping, dry bulk, tankers, decarbonization, fleet, EBITDA, NAV, dividends