Following two years of discussions, negotiation, restructuring and a successful shareholder vote, the deal is done, the companies say
Letters to investors from both companies detailed the financial transactions and management reshuffle that is ongoing as the Singaporean shipbuilding giants merge.
The companies announced the closing date as 28 February 2023, at which point Keppel Offshore & Marine (KOM) became a wholly owned subsidiary of Sembcorp Marine (SCM).
SCM issued new shares amounting to 54% of the shares in the merged entity, with 5% held back for liability coverage with 49% expected to be listed on the main board of Singapore’s SGX-ST exchange on 1 March 2023.
As the offshore oil and gas market has improved over 2022, the pair of companies responded by adjusting the merger terms in October, improving the equity value exchange ratio for SCM shareholders by 8%, bringing those shareholders’ total holdings in the newly formed company to 46%.
What was originally proposed as a spin-off and merger agreement for Keppel O&M in April 2022 following nearly a year of discussion and negotiation between the two firms, became a "direct acquisition".
Under the deal’s revised terms, Sembcorp said the transaction structure had been simplified, eliminating some of the approvals required in the prior proposal.
The US$3.4Bn acquisition of Keppel O&M by Sembcorp Marine is seen as essential for the Singapore shipbuilder to compete moving forward, and won the backing of Temasek, the city-state’s powerful investment arm.
The new Sembcorp Marine will be headed by current Keppel Offshore & Marine chief executive Chris Ong Leng Yeow, and will tap into a pipeline of S$7.0Bn (US$5.3Bn) of new projects won in 2022.
Accounting for around US$3Bn of Sembcorp Marine’s backlog, is a contract to build an FPSO for Brazilian energy giant Petrobras. The newbuild FPSO will be one of the largest vessels to be deployed in the Buzios field in the pre-salt Santos Basin, about 180 km off the coast of Rio de Janeiro, Brazil.
Scheduled for delivery H1 2026, FPSO P-82 will have a production capacity of 225,000 barrels of oil per day and 12M cubic metres (mcm) of gas processing per day. It will have a storage capacity of 2M barrels of oil.
The contract award followed the completion of FPSO P-71 by Estaleiro Jurong Aracruz, Sembcorp Marine’s Brazilian subsidiary in October 2022.
The merger deal has led to a board restructure, with Mark Gainsborough serving as chairman and director, and the formation of a corporate social responsibility committee and a transformation committee.
On 16 February 2023 at an Extraordinary General Meeting, shareholders overwhelmingly voted in favour of the merger between the two Singapore shipbuilding giants, Sembcorp Marine and Keppel Offshore & Marine. Results of the voting showed the number of shares represented by those in favour of the merger were 4.11M or 95.28% and opposed 203,730,349 or 4.72%.
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