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June 25, 2021

Keppel and Sembmarine in talks to merge offshore and marine units

The merged entity will be a listed company and Keppel will receive shares and a cash consideration of up to S$500m.

By Archana Rani

Singapore-based Keppel and Sembcorp Marine (Sembmarine) have initiated negations to merge their offshore and marine businesses.

The companies in their press statement said that the non-binding talks are at a preliminary stage and that the deal may or may not materialise.

Singapore state investor Temasek Holdings is the largest shareholder both Keppel and Sembcorp have.

The trading of both sets of stock was suspended soon after the companies signed non-binding agreements related to the proposed merger.

In case the deal materialises, the merged company will be a listed entity. Keppel said it will receive shares in the combined entity and a cash consideration of up to $372.7m (S$500m).

Concurrently, Keppel also signed a non-binding memorandum of understanding (MoU) with Temasek’s wholly owned subsidiary, Kyanite Investment.

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Under the terms, Keppel will sell its Keppel O&M’s legacy completed and uncompleted rigs and associated receivables to a separate Asset Co.

While Keppel would retain not more than a 20% stake as an investment in Asset Co, external investors will own the remaining 80% stake. However, Kyanite intends to procure external investors.

Keppel said that the combined scale, geographic presence, and capabilities of the enlarged entity would allow it to pursue larger contracts and pursue synergies.

Sembmarine and Keppel are also planning to undertake mutual due diligence and discuss the terms of the potential merger, which is anticipated to take several months.

Earlier this year, Keppel Offshore & Marine (Keppel O&M) announced plans to end the construction of new offshore oil rigs and invest more heavily in renewable energy.

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