Cmb.Tech And Golden Ocean Merger: Leverage Risks, Liquidity Gains And The Underlying Opportunity

2025-04-30 07:02:19 ET

Summary

• Cmb.Tech acquired John Fredriksen’s 40.8% controlling stake in Golden Ocean in early March for $14.49/sh. Since, they have acquired additional shares in the open market.
• In the crude tanker preview, published in early April, we mentioned we believed a shares-for-shares merger between the two was the most likely outcome.
• Last week CMBT and GOGL announced the signing of a term sheet for a shares-for-shares merger based on an exchange ratio of 0.95 CMBT shares for each GOGL share.
• While some of the NAV numbers touted are arguably questionable, we believe the transaction is a win for CMBT, as well as a reasonable resolution for GOGL after losing Fredriksen.
• We currently have a 'fair value estimate' of $10.00/sh on CMBT and $9.50/sh on GOGL (which is based on our assumption of the deal going forward).

This piece was shared last Friday with members of Value Investor's Edge .

Introduction

Cmb.Tech ( CMBT ) announced last week that it had signed a term sheet for a stock-for-stock merger with Golden Ocean ( GOGL ). After acquiring John Fredriksen's 40.8% GOGL stake for $14.49/sh, they acquired additional shares in the open market, increasing their shareholding to almost 50%....

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