FRO $62.47 1-Frontline signals interest in Overseas Shipholding
Fri Jul 11, 2008 6:15am EDT
By John Acher
OSLO, July 11 (Reuters) - Crude oil shipper Frontline (FRO.OL: Quote, Profile, Research, Stock Buzz) wants talks with its rival Overseas Shipholding (OSG.N: Quote, Profile, Research, Stock Buzz) on a merger or acquisition, Frontline and its principal owner John Fredriksen said in a filing to U.S. regulators.
Combining Frontline and OSG, which are the biggest and second biggest publicly traded oil tanker companies, would create a world giant with a fleet of 189 vessels and a further 57 on order with shipyards.
Frontline, which has a 5.6 percent stake in Overseas Shipholding Group (OSG.N: Quote, Profile, Research, Stock Buzz) Inc (OSG), has previously held talks with the U.S. based shipper but failed to acquire it.
It said in a July 10 filing to the U.S. Securities and Exchange Commission that it entered a forward contract with DnB NOR (DNBNOR.OL: Quote, Profile, Research, Stock Buzz) to buy 1.37 million shares, equal to a 4.4 percent stake, in OSG on Aug. 29 for $93.13 million.
Frontline said it would contact OSG's management, board or other major shareholders to discuss "alternatives" to boost shareholder value.
Oslo and New York-listed Frontline said those talks could lead to "transactions which may result in (Frontline) combining with or acquiring control in the Issuer (OSG)".
Frontline officials could not be reached immediately for further comment.
In March, Frontline and Fredriksen companies flagged a 9.7 percent holding in OSG. But in May, Fredriksen-controlled firms reduced their OSG holdings which brought the aggregate stake down to 5.2 percent.
In the SEC filing, Frontline said it holds 1.55 million OSG shares equal to a 5.0 percent stake and its subsidiary Bandama Investment Ltd owns 183,400 shares, equal to a 0.6 percent stake, based on 30.73 million shares outstanding.
OSG, with 116 vessels and another 41 on order, says its strategy is to be a market leader in each of the segments in which it operates.
Frontline which has 72 vessels, is the world's biggest independent operator of supertankers, known in the industry as very large crude carriers (VLCCs).
It has 45 VLCCs and another 10 on order. OSG has 20 VLCCs, and together the companies would have more than 13 percent of the current world fleet of about 486 vessels not counting newbuild projects.
Frontline had first-quarter net income of $221 million on revenues of $528 million. OSG had net income of $112 million on time charter equivalent revenues of $376 million.
Frontline shares traded up 2.9 percent at 319.50 crowns by 0935 GMT, valuing the company at about 23.9 billion Norwegian crowns ($4.68 billion).
OSG shares closed at $75.21 on Thursday, valuing it at $2.32 billion. (Reporting by John Acher, editing by Will Waterman and David Cowell)
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