- Frontline Ltd's FRO price target has been raised to $9 (a downside of 8%) from $8 by H.C. Wainwright analyst Magnus Fyhr. The analyst maintains a Neutral rating on the shares.
- The target price raise comes after the company agreed to merge with Euronav NV EURN, a crude tanker company, to create a tanker powerhouse with a fleet of 150 tankers.
- FRO plans to issue 1.45 shares for each EURN share, resulting in EURN and FRO shareholders owning 59% and 41% of the combined company, respectively.
- The combined company will keep the Frontline name and be headed by Hugo De Stoop as the CEO.
- The analyst believes the merger creates a tanker powerhouse.
- The combined business is expected to control 69 VLCCs and 57 Suezmax oil tankers, and 20 LR2 product tankers.
- Fyhr states that the merger will help consolidate FRO's presence in the large crude tanker market while keeping a footprint in the product tanker sector.
- The analyst believes the combined entity will attract a wider institutional following. The market cap would be almost 4x larger than Scorpio Tankers Inc STNG at $1.2 billion and Hafnia Ltd HFIAF at $1.0 billion.
- Price Action: FRO shares are trading higher by 11.34% at $9.72 and EURN higher by 9.08% at $13.09 on the last check Friday.
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