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

CMB.TECH and Golden Ocean 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 merger where CMB.TECH will be the surviving entity.
• The merger is a stock-for-stock transaction, with CMB.TECH and Golden Ocean shareholders owning approximately 67% and 33% of the post-merger company, respectively.
• The exchange ratio is 0.95 CMB.TECH shares for one Golden Ocean share, based on a value of $15.23 per share for CMB.TECH and $14.49 per share for Golden Ocean.
• The combined company will operate as CMB.TECH NV, headquartered in Antwerp, with a secondary listing planned for the Oslo Brs.
• The merger is expected to close in Q3 of this year, pending shareholder approval and customary administrative steps.
• CMB.TECH's net profit for 2024 was $871 million, with a liquidity of $343.8 million, a contract backlog of close to $3 billion, and outstanding CapEx of $2.2 billion.
• The fair market value of CMB.TECH's fleet is $7.5 billion.
• Golden Ocean has a fleet of 91 ships, with an average age of around 8 years and approximately 2/3 of their capesizes are fitted with scrubbers.
• The combined company would have more than 250 ships, a contract backlog of $3 billion, an average fleet age of six years, and a fair market value of $11 billion.
• The post-merger NAV is projected at $14.9 per share.
• The combined company's strategy will focus on diversification and decarbonisation, including operating a modern eco fleet, retrofitting ships for hydrogen and ammonia, and investing in hydrogen and ammonia-fitted ships.
• Based on 2024 figures, the combined company would have over $1 billion in EBITDA and a leverage of roughly 65% on a market-to-market basis.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the proposed merger, highlighting the strategic benefits, financial strength, and future growth potential of the combined company. The focus on diversification and decarbonisation is also viewed favorably.

Positives

• The merger creates a leading diversified maritime group with a large fleet and significant market capitalization.
• The combined company benefits from diversification across various shipping segments, reducing reliance on any single market cycle.
• The focus on decarbonisation and low-carbon solutions positions the company well for future regulatory changes and customer demands.
• The increased free float (38%) will attract a new slew of investors.
• The combined company has a strong contract backlog of $3 billion, providing stable cash flows.
• Golden Ocean's modern, efficient eco-fleet complements CMB.TECH's existing fleet and decarbonisation efforts.
• The combined company will have a modern fleet with an average age of six years.

Negatives

• The merger is subject to shareholder approval and customary administrative steps, which could delay or prevent the transaction.
• The integration of Golden Ocean into CMB.TECH may take time and effort.
• The company is cautious on the chemical tanker market and negative on the container market, which could impact overall performance.
• The combined company will have a leverage of roughly 65% on a market-to-market basis.

Risks

• The tanker market is subject to geopolitical risks, including trade wars, economic outlook, and sanctions.
• The dry bulk market is dependent on demand from Asia, particularly China, and any slowdown in Chinese demand could negatively impact the market.
• The implementation of the IMO's carbon tax is subject to ratification in October, and if not ratified, it could impact the company's decarbonisation strategy.
• There is a risk that the company's assumptions about the cost of producing hydrogen and ammonia may not materialize, impacting the competitiveness of its low-carbon solutions.

Future Outlook

The combined company aims to create sustainable cash flows, focusing on diversification and decarbonisation. They plan to invest in segments with the most potential and offer low-carbon solutions to customers. The company anticipates growth in the dry bulk sector due to healthy demand from Asia and restricted yard capacity.

Management Comments

• Alexander Saverys: 'We want to be invested in different segments, but we want to offer products that our customers want.'
• Alexander Saverys: 'We are pragmatic... We'll keep on using them, keep on making money with them and reinvesting that money in more modern tonnage, which will be either ready or fitted with these alternative fuels.'
• Ludovic Saverys: 'Building up that contract backlog helps us to derisk when we do opportunities like Golden Ocean, where we have a big spot exposure, when we think we're well positioned for a market like dry bulk or larger tankers to pick up it allows us to take more risk at that moment.'

Industry Context

The merger reflects a trend towards consolidation in the maritime industry, with companies seeking to diversify their operations and reduce exposure to specific market cycles. The focus on decarbonisation aligns with increasing regulatory pressure and customer demand for sustainable shipping solutions. The discussion of supply and demand dynamics in the tanker and dry bulk markets provides insights into the company's strategic positioning.

Comparison to Industry Standards

• Golden Ocean is the largest listed owner of Capesizes and Newcastlemaxes, with a modern fleet compared to its peers.
• The combined fleet on the dry side of Bocimar and Golden Ocean will be a fleet of over 120 vessels, of which 87 ships will be Newcastlemaxes and Capesize ships.
• The combined company will be the only large listed owner with significant exposure to the Capesize and Newcastlemax segment, with significant liquidity in this share.
• The company's focus on ammonia dual fuel engines differentiates it from competitors in the dry bulk sector.

Stakeholder Impact

• Shareholders of both CMB.TECH and Golden Ocean will be impacted by the merger, with changes in ownership and potential for increased value.
• 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 solutions, particularly in the area of low-carbon shipping.
• Suppliers and creditors may see changes in their relationships with the combined company.

Next Steps

• Finalizing binding transaction documents.
• Holding a General Assembly of shareholders of Golden Ocean to vote on the merger.
• Applying for a secondary listing on Oslo Brs.
• Integrating Golden Ocean into CMB.TECH.

Key Dates

Keywords

merger, CMB.TECH, Golden Ocean, maritime, shipping, decarbonisation, dry bulk, tankers, hydrogen, ammonia, fleet, EBITDA