Sembcorp Marine’s multi-billion dollar takeover of Keppel Offshore & Marine, which will create a Singapore mega-offshore and marine contractor, is expected to complete on 28 February — almost four months to the day that the acquisition was first touted.
“The enlarged group is envisaged to unlock synergies from the integration of two established industry players [and] it is expected that the enlarged group will create greater value for stakeholders," Sembmarine said this week.
“As a single organisation, the collective workforce will benefit from expanded opportunities for career development and growth in the areas of renewables, new energy and cleaner O&M solutions. It will also strengthen Singapore’s position as both a maritime, and offshore and marine hub.”
Jobs could be lost
Sembmarine has already been giving thought as to how the enlarged entity will be restructured and what synergies can be enjoyed.
Whilst it has not divulged specifics or numbers, sources close to the company have confirmed to Upstream that some rationalisation of the workforce — such as in potentially overlapping, particularly middle management, roles — is likely on the cards.
The combined company also needs to evaluate and maybe streamline or repurpose its yard resources — both Sembmarine and Keppel O&M currently have several facilities apiece in Singapore, although the latter recently sold subsidiary Keppel Fels’ Gul Road yard in the city state to ST Engineering Marine.
Both Sembmarine and Keppel O&M also have yard facilities overseas and these, or future regional yard acquisitions, could play a role for the enlarged Sembmarine.
Upstream understands that Keppel O&M last year was checking out third party and/or idle yards in Malaysia and Batam, Indonesia — where Sembmarine already has its 85-hectare SMOE facility — with the rationale being that jackets and sub-structures could be built in lower-cost environments with topsides and more complex facilities being constructed in Singapore.
The companies are no strangers to sub-contracting hulls for floating production, storage and offloading vessels to yards in China but the enlarged Sembmarine will likely find itself in future facing increasing competition from China for the entire FPSO construction, and potentially also engineering, scope.
New name mooted
Also on Sembmarine’s radar is a likely new name for the enlarged company, which it has described as a “premier global player with deep engineering heritage”.
Upstream understands that this is still being discussed internally although one company official privately said that the new name could well have "Singapore" in the title.
The expected corporate rebranding and official launch of the enlarged Sembmarine — with or without a new name — is set for later in 2023 amid much fanfare both on home soil and in the international arena.
Sembmarine’s shareholders on Thursday morning local time voted overwhelmingly in favour of the Singapore contractor’s acquisition of compatriot Keppel O&M. More than 95% of the votes cast at the 16 February virtual extraordinary general meeting (EGM) were in favour of the S$4.5 billion (US$3.37 billion) deal.
Sembmarine was almost uncharacteristically quiet on Thursday although prior to the historic vote it did respond to a barrage of further queries from its shareholders that had been submitted after the 7 February deadline for submission of questions relating to its 31 January circular on the proposed combination.
Other than those responses via the Singapore Stock Exchange (SGX), the company applied to SGX for a trading halt ahead of the EGM, then informed the bourse of the bare bones details of its shareholders’ vote, before applying to resume trading later in the day.
An anticipated detailed statement or media release on the landmark deal failed to materialise on Thursday or during Friday morning local time.
Startree Investments, the relevant entity of the Singapore government’s investment arm — Temasek Holdings (Private) — holding Sembmarine shares, abstained from voting on the resolution that proposed the acquisition of Keppel O&M from its parent Keppel Corporation.
Temasek, which has significant stakes in both contractors, will hold a 35.5% interest in the enlarged entity.
T S Tay Public Accounting Corporation was appointed as the scrutineer for the EGM.
