Golden Ocean Group: A Maritime Powerhouse Emerges from Strategic Merger and Fleet Modernization

The shipping industry is undergoing a seismic shift, driven by decarbonization mandates, fleet modernization, and consolidation. At the forefront of this transformation is Golden Ocean Group Limited (NASDAQ: GOGL), which is poised to amplify its market leadership through its strategic merger with CMB.TECH, a pioneer in green maritime technology. This move, combined with GOGL's dividend resilience and undervalued fleet upgrades, positions the company as a compelling investment opportunity. Let's dissect why now is the time to consider GOGL.

The Merger with CMB.TECH: Building a Decarbonized Maritime Giant

The proposed merger between GOGL and CMB.TECH, expected to close in Q3 2025, creates a diversified maritime powerhouse. Here's the strategic calculus:

1. Fleet Synergy:
2. Combined fleet of over 250 vessels, including 87 Capesize/Newcastlemax dry bulk carriers (GOGL's core) and CMB.TECH's 64 hydrogen-enabled vessels.

3. This diversification reduces reliance on any single commodity, with exposure to crude tankers, chemical carriers, and offshore wind support—a sector projected to hit $100 billion by 2030.

4. Decarbonization Edge:

5. CMB.TECH's expertise in green fuels (hydrogen/ammonia) aligns with the IMO 2028 carbon intensity rules, which will penalize high-emission ships. The merged fleet's low-carbon footprint positions it to avoid fines and secure long-term contracts with environmentally conscious clients.

6. Valuation Upside:

7. GOGL shareholders will own ~33% of the combined entity, with the exchange ratio implying a post-merger Net Asset Value (NAV) of $14.90/share. As of July 2025, GOGL's stock trades at $8.39, a 42% discount to NAV.

Dividend Resilience Amid Payout Pressures

GOGL has maintained a 3.2% dividend yield despite a 145% payout ratio in 2024, a figure that raises eyebrows. However, the dividend's sustainability hinges on two critical factors:

1. Cash Flow Stability:

2. GOGL's dry bulk fleet operates under long-term contracts (average duration: 3.5 years), insulating it from short-term rate volatility. The Capesize fleet—the largest in the sector—benefits from high iron ore demand from Brazil/West Africa to Asia.

3. Cost Discipline:

4. The merger's $2 billion debt facility (including a $1.25B term loan) will refinance existing debt and reduce interest costs. Post-merger, the combined entity's pro forma 2024 EBITDA exceeds $1 billion, supporting dividend payouts even in cyclical downturns.

5. Dividend History:

6. GOGL has paid dividends for 17 consecutive years, with a 62.5% payout ratio over the past decade. The current high ratio is temporary, tied to a one-off $1.2B impairment in 2023.

Fleet Modernization: A Catalyst for Efficiency and Safety

GOGL's fleet modernization is a hidden gem often overlooked by investors. Key metrics include:

• Average Fleet Age: 6 years (vs. industry average of 9 years), minimizing dry-docking costs and downtime.
• Technological Upgrades:
• Ammonia-ready engines on 60% of newbuilds, enabling compliance with IMO 2028.
• Scrubber installations on 90% of vessels, reducing sulfur emissions and fuel costs.

This efficiency drives operating margins of 25% in 2024, outperforming peers. The merger's expanded scale will further lower per-vessel operating costs, creating a 20% EBITDA uplift by .

Why the Near-Term Pain Is Temporary

Bearish sentiment toward GOGL stems from two factors:

1. Dry Bulk Rate Volatility:

2. Capesize rates fell 25% YTD due to seasonal factors and Chinese steel demand uncertainty. However, long-term contracts insulate cash flows, and rates are expected to rebound in H2 2025 as Brazil's iron ore exports surge.

3. Debt Concerns:

4. The merger's $2B debt facility is manageable: interest coverage (EBITDA/interest) remains 4.5x, well above the 2x threshold for investment-grade stability.

Investment Thesis: GOGL Is a Buy at Current Levels

The merger with CMB.TECH, dividend resilience, and modernized fleet create a trifecta of upside:

• Short-Term Catalyst: The Q3 2025 merger completion will unlock the $14.90 post-merger NAV, narrowing the ~40% discount to current stock price.
• Long-Term Growth: The combined entity's exposure to offshore wind and green fuels aligns with $200B in global decarbonization investments by 2030.
• Risk-Adjusted Return: Even without the merger, GOGL's 9.5% dividend yield (post-merger) and fleet efficiency provide a 12% annualized return floor.

Final Take: GOGL's Time to Shine

Golden Ocean is undervalued, underappreciated, and strategically positioned to capitalize on industry tailwinds. The merger with CMB.TECH supercharges its decarbonization efforts, while its modern fleet and stable dividends offer a rare combination of safety and growth. Investors ignoring GOGL's $14.90 NAV and $100B offshore wind opportunity risk missing out on a maritime turnaround story.

Recommendation: Buy GOGL at current levels, with a 12-month price target of $12–$14, approaching post-merger NAV. The merger's completion in Q3 2025 will be the catalyst to watch.

Data as of July 14, 2025. Past performance does not guarantee future results.