BY Richard Summerfield
Singaporean offshore engineering group Sembcorp Marine has agreed to a $6.29bn merger with Keppel Corp’s offshore and marine unit.
Under the terms of the deal, Temasek, Sembcorp’s majority shareholder, will become the largest shareholder in the merged company, with a 33.5 percent stake. As part of the merger, Keppel and its shareholders will own 56 percent of the newly combined company, with Sembmarine’s shareholders owning the rest.
According to a joint statement announcing the deal, the combined entity’s market value was S$8.7bn on a proforma basis, but that this could change based on the entity’s share price when it lists.
The combined company will be wholly owned by a new holding entity, which will be listed on the Singapore stock exchange, the two companies said in the joint statement. A shareholder meeting is expected to be held in the fourth quarter to seek approval for the transaction, which is subject to various regulatory sign offs.
“The signing of a win-win agreement on the Proposed Combination of Keppel O&M and Sembcorp Marine marks a strategic milestone for the offshore & marine sector,” said Loh Chin Hua, chief executive of Keppel and chairman of Keppel O&M. “It brings together two leading O&M companies in Singapore to create a stronger player that can realise synergies and compete more effectively amidst the energy transition. Together with the resolution of Keppel O&M’s legacy rigs, this is a major step forward in Keppel’s Vision 2030 journey, as we simplify our business and sharpen our focus on providing solutions for sustainable urbanisation.”
“The Proposed Combination marks a major milestone in Sembcorp Marine’s strategic business transformation journey since 2015 to stay resilient amid dramatic changes in our industry,” said Tan Sri Mohd Hassan Marican, chairman of Sembcorp Marine. “Sembcorp Marine and Keppel O&M are Singapore’s homegrown marine icons. I am confident the Combined Entity, with its larger operational scale, broader geographical footprint and enhanced capabilities, will create a leading Singapore player to capitalise on the opportunities in the offshore and marine, as well as the renewable and clean energy sectors.”
“We are pleased that Keppel and Sembcorp Marine have come to an agreement on the terms of a combination that we think will be transformational for the companies,” said Nagi Hamiyeh, head of the portfolio development group at Temasek. “We believe the combined business will have the expertise and capacity to accelerate the pivot towards growing opportunities in the renewable and clean energy sectors, and pursue meaningful projects around the world that address the increasing need for greener and cleaner energy solutions. In doing so, it will be able to deliver long-term value creation for shareholders and other stakeholders. We look forward to the support of the shareholders of Keppel and Sembcorp Marine to make this possible.”
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