Cool Company Ltd.'s Merger with EPS Ventures: A Strategic Exit and Its Implications for Shareholders and the LNG Sector

The proposed merger between Cool Company Ltd. (CoolCo) and EPS Ventures has emerged as a pivotal moment in the liquefied natural gas (LNG) sector, offering a compelling case study of liquidity realization and strategic consolidation in a fragmented market. With the transaction valued at $9.65 per share-a 26% premium to CoolCo's closing price on September 22, 2025, and a 38% premium to its 90-day volume-weighted average-EPS Ventures' acquisition of the remaining 41% stake in CoolCo represents both a financial inflection point for shareholders and a broader industry shift toward scale and sustainability according to CoolCo's announcement.

Strategic Rationale: Consolidation as a Response to Market Pressures

The merger is framed as a strategic exit for CoolCo, a company navigating a sector marked by regulatory turbulence, technological transitions, and oversupply risks. CoolCo's board, having evaluated the proposal through an independent Special Committee, emphasized the transaction's role in strengthening the company's long-term viability amid "challenging market conditions." This aligns with broader trends in the LNG industry, where firms are accelerating fleet modernization to comply with stringent emissions regulations such as the Carbon Intensity Indicator (CII) and FuelEU Maritime. CoolCo's recent investments in LNGE retrofits and its focus on lower-emission solutions position it as a target for consolidation by larger players seeking to streamline operations and meet decarbonization goals.

EPS Ventures, a subsidiary of Eastern Pacific Shipping, is leveraging this opportunity to solidify its dominance in the LNG transport sector. By acquiring CoolCo, EPS gains access to a fleet that complements its existing operations, enabling economies of scale in vessel management and chartering. According to Maritime Executive, this move is part of EPS's broader strategy to "consolidate the fragmented LNG transport sector and strengthen its market position through efficiency." The transaction, expected to close by January 9, 2026, underscores the sector's shift toward fewer, larger operators capable of absorbing the capital-intensive costs of compliance and innovation.

Shareholder Implications: Liquidity vs. Long-Term Value

For CoolCo shareholders, the merger presents a clear liquidity event. The $9.65 per-share offer, which transitions the company to private ownership under EPS's 59.3% stake, provides a premium that reflects the company's strategic assets and the acquirer's confidence in its future cash flows. However, the deal also signals a departure from public market dynamics, where CoolCo's stock had faced volatility due to sector-wide uncertainties. Shareholders are advised to review the proxy statement and related SEC filings, as the merger's approval hinges on a vote scheduled for late November 2025.

Analysts have highlighted the tension between immediate gains and long-term value creation. While the premium offers a near-term windfall, the post-merger structure-where EPS will control decision-making-may limit CoolCo's autonomy in pursuing independent growth opportunities. This trade-off is emblematic of the LNG sector's current phase, where smaller operators are increasingly opting for strategic exits to larger entities with the financial firepower to navigate regulatory and market headwinds .

Sector-Wide Implications: A Fragmented Market's Path to Consolidation

The LNG sector's fragmentation is a critical backdrop to this merger. In Q3 2025, the market faced dual pressures: geopolitical shifts, such as the EU's planned 2027 ban on Russian LNG imports, and the rapid deployment of new U.S. and Canadian export terminals, which are expected to add 114 million tons per annum of capacity by 2026. These developments have intensified competition, particularly in Europe, where LNG imports surged 30% year-on-year in Q3 2025, while Asian demand remained subdued.

CoolCo's merger with EPS Ventures is a microcosm of the sector's broader consolidation trend. As older, less efficient steam turbine vessels are idled, companies with modern fleets and robust balance sheets are gaining a competitive edge. EPS's acquisition of CoolCo not only enhances its operational scale but also accelerates the retirement of legacy assets, aligning with global decarbonization imperatives. This trend is likely to intensify as regulatory costs rise and new projects face delays due to environmental scrutiny.

Conclusion: A Catalyst for Sector Evolution

CoolCo's merger with EPS Ventures is more than a corporate transaction-it is a harbinger of the LNG sector's next phase. For shareholders, the deal offers a liquidity event in a market where public valuations have struggled to reflect long-term potential. For the industry, it exemplifies the growing necessity of consolidation to achieve the scale required for regulatory compliance and technological advancement. As the global LNG market grapples with oversupply, geopolitical realignments, and sustainability mandates, transactions like this will likely become more frequent, reshaping the competitive landscape and redefining value creation in the sector.