French oil-services company Technip and US-based FMC Technologies have signed a memorandum of understanding (MoU) to combine and create a new company named TechnipFMC with a market value of $13bn.
Each company’s shareholders will own close to 50% of the new company, which will have its operational headquarters in Paris, France.
The combination will build on the Forsys Subsea joint venture that was formed between Technip and FMC last year.
TechnipFMC will offer a new generation of solutions related to subsea, surface and onshore/offshore to reduce the cost of producing and transforming hydrocarbons.
Together, the two companies reported consolidated backlog of around $20bn as of 31 March.
FMC Technologies chairman and CEO John Gremp said: "This is a compelling combination that will create significant additional value for clients and all shareholders, by expanding the success that FMC Technologies and Technip have achieved through our alliance and joint venture, to capitalise on new opportunities and drive accelerated growth."
Technip chairman and CEO Thierry Pilenko said: "A year ago, we were at the forefront of recognising the importance of a broader view of our clients’ challenges and seized the opportunity that working together in our alliance could bring.
"Together, TechnipFMC can add more value across subsea, surface and onshore/offshore, enabling us to accelerate our growth."
The new company will combine Technip’s systems and solutions, assets, engineering strengths and project management capabilities with FMC’s technology, manufacturing and service capabilities.
TechnipFMC will collaborate with customers in the development process to design, deliver and install better solutions and will expand on competencies in digital life-of-field and data management services.
The combination will deliver at least $400m in annual pretax cost synergies. The combined company expects to achieve pretax cost synergies of $200m in 2018, and at least $400m in 2019 thereafter.
The deal is expected to close early in 2017, subject to various regulatory approvals and other customary closing conditions.
Image: TechnipFMC will offer solutions related to subsea, surface and onshore/offshore. Photo: courtesy of think4photop/FreeDigitalPhotos.net.