U.S. Markets closed

Frontline must raise bid to overcome DHT poison pill, analysts say

OSLO, Jan 30 (Reuters) - Crude oil tanker firm Frontline , which has made an unsolicited offer to buy competitor DHT Holdings, must raise its bid for the attempted takeover to succeed, analysts said on Monday.

** Oslo- and New York-listed Frontline, controlled by shipping tycoon John Fredriksen, made a non-binding offer during the weekend to acquire all outstanding shares in U.S.-listed DHT

** A deal would create the world's largest public tanker company by fleet size with some 80 vessels, including 40 very large crude carriers (VLCCs)

** Frontline, itself valued at $1.1 billion, proposed an all-share deal valuing the equity in DHT at around $475 million. DHT also has interest bearing debt of some $685 million

** Frontline has already bought 16 percent of DHT's shares

** In response, DHT's board said it had adopted a plan allowing it to issue more shares to existing owners if Frontline raises its stake or other investors buy stakes of more than 10 percent

** ABG Sundal Collier analyst Lukas Daul said:

** "The bid was at a 20 percent premium compared to the closing (share) price, but I don't think that it's enough."

** "DHT answered with a poison pill, so I have a hard time seeing that they will accept the bid any time soon."

** "I think Frontline will need to sweeten the bid for this to go through"

** Clarkson Platou Securities analyst Frode Moerkedal said:

** "Today's net asset value of $5 per share in DHT reflects a low cycle. Over time, vessel values should be higher."

** "DHT board has issued a poison pill. It indicates they are working for a higher price."

** "As an example, a five-year old VLCC is valued at $62 million while the historical average is $80 million. If you take the historical price, then the (bid per share) should be above $8."

** "Frontline could in theory offer $6.5 to $7 per DHT share and it would still be neutral for its own shares, so they have more to go on ... Then the question is if Frontline is willing to that. I am not sure."

** Brokerage Fearnley said:

** "Our first take is that the offer is on the low side and we believe an improved offer is needed in order to get acceptance."

** "Should the offer go through, we would consider it a fantastic move from Frontline"

** DHT co-CEO Trygve Munthe told Reuters the company will closely evaluate Frontline's bid

** Frontline was not available for comment (Reporting by Joachim Dagenborg, Ole Petter Skonnord, editing by Terje Solsvik)