Abu Dhabi’s state-owned National Petroleum Construction Company (NPCC) is merging with National Marine Dredging Company (NMDC) in a reverse takeover to create a major integrated oil and gas and marine services entity in the Middle East and North Africa.
The merger will see the birth of an oil services giant with combined revenues of 8.9 billion dirhams ($2.4 billion) last year.
NPCC — which is controlled by the Abu Dhabi government through its investment vehicles, ADQ — will transfer all its share capital to NMDC.
“This transaction will create a larger, more diversified and financially flexible national champion,” said Khalifa al Suwaidi, chief investment officer at ADQ and chairman of Senaat, which is NPCC’s main shareholder and is itself controlled by ADQ.
ADQ is also a significant shareholder in NMDC, listed on the Abu Dhabi Stock Exchange.
NPCC's shareholders would receive convertible instruments that, once converted, would give them a 69.7% stake in the combined entity.
The combination would "create a leading integrated oil and gas and marine services" contracting company in the Middle East and North Africa, serving both the regional and South Asian markets, according to ADQ.
“As one of the largest pan-regional EPC [engineering, procurement and construction] players, this transaction will create a larger, more diversified and financially flexible national champion," Suwaidi added.
The combination would also unlock significant value through "increased scale, revenue diversification, cost synergies and increased resilience to market cycles," ADQ said.
"We are excited about the significant opportunity that can be created via this transaction, driving performance and growth to generate value not only for shareholders, but the UAE as a whole," Suwaidi added.
"The board of NMDC will consider the transaction proposed by the NPCC shareholders before making any recommendation to shareholders," the marine dredging company said.
ADQ anticipates the deal closing by the end of 2020, subject to shareholder and regulatory approvals.
Once the deal has been finalised, ADQ will consider increasing the free float of the combined group's shares through a follow-on public offering at "a later date", Suwaidi added.
NMDC is a contractor for dredging, land reclamation and marine civil construction. Its operations in the Middle East span sectors such as energy, sea trade and tourism.
NPCC is an engineering, procurement and construction contractor that provides services to the offshore and onshore oil and gas sector. It has projects with Saudi Aramco and Abu Dhabi National Oil Company, two of the world’s biggest oil companies.