Sembcorp Marine to buy Keppel Offshore & Marine under revised deal

Singapore’s Sembcorp Marine and Keppel Corporation have revised their merger deal which will now see Sembcorp Marine acquire the latter’s offshore oil rig builder Keppel O&M in a S$4.5bn ($3.19bn) deal.

The amended deal would increase the equity ratio for Sembmarine’s shareholders to 46% of the new company from 44%, with Keppel and its shareholders owning the rest. As a result, the value of the equity shares in Sembcorp Marine that Keppel would receive from the proposed transaction would be lowered by about S$378m.

“While the exchange ratio for Keppel has been lowered slightly, this is still a very positive outcome for Keppel and its shareholders,” said Loh Chin Hua, CEO of Keppel.

The company added that the updated transaction structure “simplifies the implementation of the proposed combination, provides greater deal certainty and allows faster completion.”

The initial merger deal struck in April would have required creating a separate combined entity, needing various approvals and consents. Under the simplified structure, the transaction will only require the majority approval of both Keppel’s and Sembcorp Marine’s shareholders.

Parties are targeting to complete the proposed combination by the end of the year. Keppel O&M’s legacy rigs and associated receivables will not be part of the transaction.

After the acquisition of Keppel O&M, the enlarged Sembmarine would have a total net orderbook of more than S$18bn.

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