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, CMB.TECH NV, will be headquartered in Antwerp, Belgium, and listed on NYSE, Euronext Brussels, and 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, 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 dry-bulk vessels, with an average age of 7.5 years.
• 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.
• 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.
• The company aims to reward shareholders by creating value and diverse, sustainable cash flows through diversification and decarbonization.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting the benefits of diversification, decarbonization, and value creation. The management expresses confidence in the combined entity's future prospects and its ability to capitalize on market opportunities. The financial metrics and strategic rationale 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 diversified fleet across multiple shipping segments, enhancing resilience to market volatility.
• The combined entity has a strong balance sheet and a large free float, making it attractive to investors.
• The merger accelerates decarbonization efforts by combining CMB.TECH's low-carbon fuel technology with Golden Ocean's modern fleet.
• The Saverys family remains a strong anchor shareholder, providing stability and long-term vision.
• The company has a significant contract backlog and a history of dividend payouts.
• The combined EBITDA on a pro forma basis for 2024 would have been more than $1 billion, excluding capital gains.
• Golden Ocean's modern fleet contributes to fuel efficiency and reduced emissions.

Negatives

• The merger is subject to regulatory and shareholder approvals, which could delay or prevent the transaction.
• The container market outlook is negative due to increased vessel supply and potentially flat demand.
• The chemical tanker market outlook is cautious due to wobbly demand.
• The intense dry docking period for Golden Ocean's fleet will impact results in Q1 and onwards.
• The company has significant outstanding CapEx of $2.2 billion.

Risks

• Regulatory approvals may not be obtained in a timely manner or at all.
• Shareholder approval from Golden Ocean may not be secured.
• Global economic slowdown could impact demand for shipping services.
• Volatile shipping markets could affect profitability.
• Increased tariffs and trade disruptions could create uncertainty and reduce global GDP growth.
• Sanctions on Russia and Iran could impact tanker markets.
• The container market faces challenges due to increased vessel supply and potentially flat demand.
• The company faces risks associated with the adoption and availability of low-carbon fuels like hydrogen and ammonia.

Future Outlook

The combined company aims to create value through diversification, decarbonization, and growth, targeting opportunities in the markets and leveraging its large fleet and strong balance sheet. They anticipate a positive outlook for tankers and dry bulk, while remaining cautious about the container market.

Management Comments

• Alexander Saverys (CEO, CMB.TECH): 'We want to reward our shareholders by creating value. We want to create diverse, sustainable and high quality cash flows.'
• Alexander Saverys (CEO, CMB.TECH): 'Our strategy is around the diversification and decarbonisation.'
• Peder Simonsen (CEO, Golden Ocean): '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): '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 shipping industry to enhance resilience and address decarbonization challenges. The combined entity aims to capitalize on the expected growth in demand for low-carbon shipping solutions and the positive outlook for the tanker and dry bulk markets.

Comparison to Industry Standards

• Golden Ocean is the largest listed owner of large-size dry-bulk vessels, with a modern fleet compared to industry averages.
• The combined entity will be among the largest owners of Capesize ships, rivaling COSCO.
• The company's focus on ammonia-ready and ammonia-fitted vessels positions it ahead of competitors in meeting future emissions regulations.
• The company's modern fleet is more fuel-efficient than older vessels in the market.
• The company's low cash break-even rate of around $13,800 across the Golden Ocean fleet enables it to remain competitive in the spot market and pay out sustainable dividends.

Stakeholder Impact

• Shareholders of both CMB.TECH and Golden Ocean will be impacted by the merger, with potential for value creation and dividend payouts.
• Employees of both companies may experience changes in roles and responsibilities as a result of the integration.
• Customers will benefit from a wider range of services and low-carbon shipping solutions.
• Suppliers and creditors will be impacted by the combined entity's financial strength and operational scale.

Next Steps

• Obtain regulatory approvals.
• Sign a merger agreement.
• File relevant documents with the SEC.
• Hold a special general meeting for Golden Ocean shareholders to vote on the merger.
• Continue engaging with customers to offer quality services and low-carbon solutions.
• Monitor market conditions and adjust strategies accordingly.

Key Dates

Keywords

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