Frontline (NYSE:FRO) shares are up nearly 4% in the pre-market session today after the shipping major announced the acquisition of 24 VLCCs (Very Large Crude Carrier) from Euronav (NYSE:EURN) in a $2.35 billion deal.
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Frontline is funding the acquisition with the sale of its 13.7 million shares in Euronav and a debt package. Further, CMB, a shareholder in Euronav, is picking up Frontline’s stake at $18.43 per share. With this transaction, CMB will hold a nearly 49% stake in Euronav.
The deal takes Frontline’s total fleet size to 89 vessels, substantially boosting its free cash flows and EPS potential. Importantly, the deal resolves a structural deadlock between Frontline and Euronav. Following Frontline’s withdrawal from a combination agreement between the two companies, Euronav filed an arbitration action in January 2023.
What is the Price Forecast for FRO Stock?
With this transaction, the arbitration action will be terminated. The acquisition is expected to close in the fourth quarter of 2023. Overall, the Street has a consensus price target of $23.10 on Frontline, alongside a Moderate Buy consensus rating. This points to a 26.4% potential upside in the stock.
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