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BHGE, Subsea 7 in 'takeover talks'

GE-controlled Baker Hughes has been looking at possible acquisition of subsea contractor: report

GE-controlled oilfield services contractor Baker Hughes (BHGE) has reportedly been engaged in recent talks for a possible acquisition of UK-based Subsea 7.

The two companies discussed a possible deal but the talks broke down due to disagreement over price, according to news agency Dow Jones, citing sources familiar with the matter.

However, one source said it was possible the companies could revive discussions at a later date.

Oslo-listed Subsea 7 issued a statement on Wednesday in which it said “has a policy not to comment on speculation or rumours” in response to the media report and a subsequent increase of as much as 10% in its share price to Nkr142 ($18).

The company has already seen its shares surge 30% so far this year on improving business prospects for field development work after a severe industry downturn.

Dampening takeover talk, Subsea 7 chairman Kristian Siem told Upstream's sister publication Dagens Naeringsliv "everyone talks to everyone in this industry" and such conversations can lead to rumours, though these were not necessarily credible.

The apparent takeover move comes in the wake of mergers among contractors - including the recent high-profile fusion of Technip and FMC Technologies - to create integrated 'fullstream' players able to deliver across-the-board equipment and services for operators.

BHGE, the result of the recent merger of Baker Hughes with General Electric unit GE Oil & Gas, would therefore seem to be seeking to expand its existing oilfield service offering in areas such as drilling and well intervention with Subsea 7’s capability in installation of subsea equipment for field developments.

Subsea 7 already has engaged in alliances with other contractors including a tie-up with Schlumberger outfit OneSubsea on the Fortuna LNG project off Equatorial Guinea, while it is also part of Aker BP’s contractor collaboration involving Aker Solutions.

The contractor, led by chief executive Jean Cahuzac, has recently also bought up a number of key assets held by Emas Chiyoda Subsea for around $100 million under a US bankruptcy sale for the Asian contractor.