A bid by Frontline (NYSE, OSE: FRO) to create the largest public tanker company in the world has fallen overboard, as the DHT (NYSE: DHT) board of directors has unanimously rejected its larger rival's unsolicited offer to acquire DHT for $475 million. Frontline sought to buy all outstanding shares of DHT in a stock-for-stock transaction with a ratio of 0.725 Frontline share per DHT share. An implied price of $5.09 per DHT share is based on Frontline's closing price January 27 and a premium of roughly 19%.
In its rejection, DHT asserts that the offer represented a significant undervaluation and would result in an unacceptable level of dilution for DHT’s shareholders. As part of the proposal, Frontline revealed it had already acquired over 15 million DHT shares, representing roughly 16% of the company's outstanding stock. In response, DHT has initiated a year-long shareholder rights plan in order to block a similar takeover attempt from happening again in the near term.
DHT has reported adjusted net revenue of $290.7 million for 2016, with EBITDA totaling $209.4 million. Both Frontline and DHT saw their share prices fall about 1% Monday.