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Frontline hits back over DHT's rejection of takeover offer

John Fredriksen’s Frontline has launched a defence of its offer for DHT Holdings which has been publicly rejected.

In a bid to further consolidate the VLCC sector creating the largest publicly listed tanker company, Frontline launched a stock-for-stock deal last week that valued DHT at $477m. Frontline already owns a 16.4% stake in DHT, however, DHT’s board of directors have rejected the proposed deal saying it “substantially undervalued” the company.

Frontline dismissed DHT’s view that the offer was “opportunistic” at a low point in the cycle as “irrelevant” given it was an all share offer.

"We believe that our offer to DHT shareholders is highly compelling since it provides a meaningful upfront premium, while also giving all shareholders the opportunity to realize the full benefit of the significant synergies and attractive upside that a combined company would create,” said Robert Hvide Macleod, ceo of Frontline.

The company noted the offer represented a 19% premium to the share price of DHT as of closing of 27 January 2017 and 31% premium to the 60-day volume weighted average price, but had been rejected as “wholly inadequate”.

“Rather than engaging in discussions with Frontline with the aim of achieving the highest possible offer to create maximum shareholder value, the board of directors of DHT adopted a one-year shareholder rights plan and has since continued to refuse to enter into any discussions,” Frontline stated.

“We believe the combination of Frontline and DHT would be better positioned to participate in a market recovery than either company would on a stand-alone basis.”

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