Singapore-based Keppel has agreed to merge its offshore rig building business Keppel Offshore & Marine (Keppel O&M) with Sembcorp Marine.
The deal comes a year after the two firms started talks regarding a possible merger to cope with downturn in the industry due volatility in oil prices and a reduced number of new orders, reported Reuters.
The latest agreement will result in the creation of a new entity that will focus on offshore renewables, new energy, and cleaner solutions in the offshore and marine sector (O&M).
Upon completion of the deal, Keppel O&M and Sembcorp will be wholly-owned by a new holding entity.
The combined entity will be 56% owned by Keppel. Sembcorp Marine’s shareholders will own the remaining 44% stake in the combined company.
Keppel will also receive $362.4m (S$500m) from Keppel O&M prior to the closing of the deal.
Temasek owns stakes in Sembcorp Marine and Keppel and will have a 33.5% stake in the merged entity, becoming the largest shareholder in it.
Keppel O&M will also offload its rigs and related receivables to an Asset Co, in which Keppel will own a 10% stake, while the remaining the 90% stake will be held by other investors.
Keppel O&M will also transfer other out-of-scope assets to Keppel.
Keppel CEO Loh Chin Hua said: “The proposed transactions are in line with Keppel’s Vision 2030 plans to be more focused and disciplined, and simplify our business, as we execute our mission to provide solutions for sustainable urbanisation.
“The proposed combination brings together two leading O&M companies in Singapore to create a premier player that is well positioned to address the challenges and opportunities in the evolving offshore and marine sector, and the energy transition.”