Stolt Tankers wish list puts M&A ahead of IPO

Niels Stolt-Nielsen says consolidation trumps flotation for stand-alone tanker business.

Stolt-Nielsen is back on the chemical tanker merger and acquisition hunt with Stolt Tankers now considered IPO ready.

Oslo-listed tanker and terminal company Stolt-Nielsen has been setting up its tanker business as a stand-alone company following the $575m takeover of Jo Tankers in 2016.

Niels Stolt-Nielsen, chief executive of Stolt-Nielsen, says the process to separate out Stolt Tankers is about to be completed, leaving it in a position to be floated or "do another deal".

Stolt-Nielsen says another deal would involve a share-for-share merger with a competitor rather than cash.

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“And if that does not happen we are also ready to do an IPO, if we so chose,” he said on an earnings call.

“We have all along said that we are just positioning ourselves to be able to pursue an opportunity quickly,” the executive explained.

“Had we not separated out, it would have taken also one year to do a deal with a potential acquisition."

Timing off for IPO

He adds that while a possible IPO for Stolt Tankers has not been discussed at board level “the option is there”.

However, Stolt-Nielsen says a listing would have to come at the right time and the chemical tanker market is not in the right position for such a move.

“We will prefer to continue to see if there are further consolidation opportunities,” he said. “I think there it's very much room for further consolidation of the business, it will help everyone.

“And if that is not possible, then we can look at doing an IPO, it's certainly big enough to standalone.”

Tanker strategy remains

Whether Stolt Tankers takes the IPO or M&A path, Stolt-Nielsen says it is the intention that Oslo-listed Stolt remain a significant majority owner in the business.

This will enable it to pursue what he calls the “terminal/tanker strategy”, where it creates operational inefficiencies between the two.

The comments came after the company reported second quarter numbers in line with market expectations yesterday.

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DNB Markets analysts led by Nicolai Dyvik say Stolt’s third quarter conference call was an invitation to potential suitors to join the best performer following a planned internal separation of Stolt Tankers.

“The guidance for a stable to modest improvement in Terminals and Tank Containers and our view of a challenging tanker market in 2018 due to high fleet growth suggest that Stolt-Nielsen could be a value trap without a Stolt Tankers spin-off,” the analyst said.

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