What happened

Shares of ocean-going oil tanker company Frontline (FRO -1.86%) surged ahead Friday, up 12.3% as of 12:55 p.m. ET, after it announced this morning that it plans to merge with Belgian rival Euronav NV (EURN -2.28%) in a $4.2 billion transaction.  

Although this really looks more like a merger of equals than an acquisition of the latter by the former, investors seem to think it's better news for Frontline than for Euronav -- shares of which are up a smaller 8.9%.

Wall painting depicts a large yellow fish eating a smaller yellow fish.

Image source: Getty Images.

So what

Euronav shareholders will trade in their shares to be replaced with new Frontline shares at a 1:1.45 ratio. When all's said and done, current Euronav shareholders will end up owning 59% of the merged company's stock, and current Frontline shareholders will own 41%.

The new company will retain the Frontline name, operate out of Belgium, Greece, Norway, Singapore, the U.K., and the U.S., and be headed by current Euronav CEO Hugo De Stoop.

Management anticipates that the total market capitalization of the new and improved Frontline will exceed $4.2 billion (a safe assumption since Frontline and Euronav combined have a market cap of about $4.7 billion today), and the combined fleet of the new company will comprise "69 VLCC and 57 Suezmax vessels, and 20 LR2/Aframax vessels."

Now what

Financially speaking, management is promising "significant synergies related to SG&A and other savings expected to be extracted from" this new "market leader in the tanker market." But management didn't put a precise number to these synergies, nor say how much it expects a merged company to do in terms of annual revenue or profit.

At a minimum, however, putting aside the question of "synergies" for the moment, investors can anticipate that a 1+1 combination of the companies should at least keep intact the two companies' combined $1.2 billion in annual revenue. With any luck, it will also reduce the amount of money the companies have been losing separately -- $350 million in total over the last 12 months.