Keppel Corp: To Combine Offshore & Marine Business With Sembcorp Marine

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By P.R. Venkat
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Sembcorp Marine Ltd. and Keppel Corp.’s offshore-and-marine business have agreed to merge, creating one of the world’s largest rig-building companies.

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Under the planned merger, Keppel Offshore & Marine and Sembcorp Marine will be combined, allowing a value realization of 9.42 billion Singapore dollars (US$6.83 billion), Keppel said Wednesday.

Keppel will receive equity shares representing a 56% equity interest in the combined business, which will be listed as a separate entity. It will also get S$500 million cash.

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After completing the deal, Keppel will distribute to its shareholders 46% of the equity shares in the combined entity.

The deal “is also expected to further strengthen Singapore’s position as a maritime and offshore & marine hub,” it said.

Trading in shares of both companies has been halted in Singapore.

Like many of their peers, Keppel and Sembcorp Marine were severely affected by the Covid-19 pandemic, which hit drilling and exploration activities worldwide. Both companies had to deal with a wave of bankruptcies among their customers, leading to order cancellations.

They had announced their intention to merge last year.

The move comes at a time when the oil prices are back to record levels, which could fuel demand for oil drilling and rigs.

“With improving conditions in the offshore & marine sector, underpinned by the improving oil price and increasing utilization and day rates of offshore drilling rigs, we are confident that Keppel O&M’s legacy rigs can be substantially monetized in the next 3-5 years,” Keppel Chief Executive Loh Chin Hua said.

Keppel has a market capitalization of S$12.12 billion while Sembcorp Marine’s is at S$4.11 billion.

The transaction is expected to be completed by the end of the year.

JP Morgan is serving as Keppel’s financial advisor.

Write to PR Venkat at [email protected]


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