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.
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?
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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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