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Frontline in takeover bid for DHT Holdings

Frontline in takeover bid for DHT Holdings
John Fredriksen’s Frontline is seeking to takeover rival tanker owner DHT Holdings in a stock-for-stock deal.

New York Stock Exchange-listed DHT Holdings said it had received a non-binding proposal from Frontline to acquire all outstanding shares in the company. Frontline has already bought around 16% stake in DHT Holdings.

Frontline is offering a stock-for-stock transaction at a ratio of 0.725 per shares in Frontline for each DHT share. This represents a price of $5.09 per share for DHT or $477m in total value for the company.

“Consistent with its fiduciary duties, DHT's Board will evaluate the proposal from Frontline and respond accordingly in due course,” DHT said.

Frontline said: "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."

Meanwhile in a move that would appear to be to prevent a hostile takeover bid DHT adopted a one-year shareholder rights plan and declared a dividend of one preferred share purchase right for each share of DHT common stock outstanding at the close of business on 9 February 2017.

“The board adopted the rights plan in response to Frontline's acquisition of a significant amount of outstanding common stock. The plan is intended to give the Board and DHT time to properly consider the non-binding proposal and to prevent any bidder or shareholder from acquiring control of DHT in a manner which would be inconsistent with the best interests of DHT and its shareholders,” DHT said.

A merger of the two companies would give Frontline a combined fleet of 94 existing tankers and newbuildings based on figures from the two companies websites.

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