In a joint statement, the companies said: "The objective of these discussions is to create a stronger Combined Entity and sustainable value over the long term for Keppel O&M and Sembcorp Marine and their respective stakeholders, in response to dramatic changes in the global offshore and marine (O&M) engineering and energy sectors."
The statement added that a deal was an opportunity to accelerate a pivot to offshore renewables, while capitalising on gas and other production facilities.
Under the terms of the MoU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the new combined entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the combined entity.
Keppel and Sembcorp Marine will undertake mutual due diligence and discuss the terms of the potential combination, which is expected to take several months.
A potential deal would bring together one of the world's largest offshore oil rig builders with smaller rival Sembcorp after the businesses were whiplashed by years of oversupply in the sector, sustained weakness in oil prices and a drop in new orders.
Both companies own a network of shipyards in Singapore and overseas, including in Brazil, and employ thousands of workers.
Sembcorp has a market value of S$2.4 billion (US$1.8 billion), while Keppel, whose businesses include property and infrastructure, is valued at S$9.3 billion.
Markets have been expecting a much-needed consolidation in the rig-building sector as companies in the shipbuilding and marine sectors in markets such as South Korea and China have already joined forces amid a weak sector outlook.
Read the latest issue of Oilfield Technology in full for free: Issue 2 2021
Oilfield Technology’s second issue of 2021 starts with a report from KPMG that examines the outlook for the Scottish oil and gas sector. The rest of the issue is dedicated to articles covering the offshore supply chain industry, offshore asset integrity, expandable liner technology, advances in drilling, data security, flow control, EOR and methane emissions.
Exclusive contributions come from Tata Steel, EM&I Group, 3X Engineering, Enventure Global Technology, Varel Energy Solutions, Adrilltech, Tendeka and more.
Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/24062021/keppel-and-sembcorp-confirm-om-merger-talks/
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