DHT rejects Frontline bid, says must turn attention to 'productive endeavors'
DHT Holdings (DHT) announced that its board unanimously rejected Frontline's (FRO) April 25 proposal to acquire DHT at a ratio of 0.8 Frontline shares for each DHT share. The board stated in a letter to Frontline: "We refer to your letter of April 25 proposing a business combination... This is, of course, the exact same proposal you made at the end of February. We unanimously rejected that proposal, determining it significantly undervalued the contribution that DHT's business would make to a combined company. But charter rates, asset values and other conditions are changing constantly in our industry, and DHT's fleet has evolved significantly since your February proposal. As a board, we will always remain open to exploring alternatives... We thoroughly and carefully reviewed your proposal with an open mind and fresh outlook. Following that review, we have unanimously concluded that your proposal continues to be wholly inadequate for DHT and its shareholders. We reject your proposal for a wide array of reasons -- some perhaps even more compelling to us now than they were this past February... Our hope is that with a better understanding of the total inadequacy of your offer, we can all turn our focus to areas more productive for our respective businesses... The bottom line is that Frontline's proposed takeover of DHT is so woefully inadequate that we do not believe further engagement will result in a fair offer." The company continued, "We believe that value creation comes from additional growth at this stage in the industry cycle... We did not build this company simply to hand it over to you on the cheap. We estimate that our fleet would contribute nearly 50% of the aggregate net asset value of a combined company. We also estimate that the DHT fleet would provide in excess of 45% of the combined company's 2018 EBITDA. You are offering our shareholders only 40% of the combined company's equity... In March, our management team met with you several times to discuss the value of the DHT fleet based on fundamental contribution. We understand that those conversations did not prove fruitful. You have refused to engage in a discussion that starts with the proposition that both fleets should be valued on a common basis... You have claimed, multiple times, that your proposal is final. We have taken you at your word on this point. We believe that it is time for both Frontline and DHT to turn our attentions to more productive endeavors." DHT FRO