The Competition & Consumer Commission of Singapore (CCCS) is inviting public feedback on the proposed merger of the nation’s leading offshore and marine companies of Sembcorp Marine and Keppel Offshore & Marine.
CCCS, which on 29 July accepted a joint notification by the duo for a decision on their planned tie-up, is now assessing whether the proposed combination would infringe section 54 of the Competition Act 2004, which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.
Sembmarine offers one-stop engineering solutions for the offshore, marine and energy industries, with an increasing focus on cleaner offshore and marine, renewables and clean energy solutions and operates shipyards and facilities such as engineering offices in Brazil, France, Indonesia, Malaysia, Norway, Poland, Singapore, the UK and the US, noted the commission.
The contractor focuses on four key capabilities: rigs and floaters; repairs and upgrades; offshore platforms; and specialised shipbuilding. It mostly constructs its vessels and facilities in Singapore “and to some extent, in Brazil”, said the CCCS.
Meanwhile, Keppel O&M that is incorporated in Singapore and wholly owned by Keppel Corporation, provides total solutions to the offshore, marine and energy industry through its global network of shipyards and offices.
It has a wide range of capabilities such as design and engineering, newbuilds, conversions and repairs, and support services; and operates shipyards and facilities in Brazil, China, Japan, the Philippines, Singapore and the US.
“In Singapore, both Sembmarine and Keppel O&M provide shipbuilding, conversion and ship repair services at their Singapore shipyards, with a specific focus on vessels and structures in the offshore, marine and energy industries,” said the CCCS.
Following the contractors’ proposed merger, the Singapore government’s investment arm Temasek will be the largest single shareholder with a 33.5% interest while the combined entity would be publicly listed on the Singapore Stock Exchange mainboard.
As a separate but connected transaction, Keppel O&M would divest its legacy rig assets and associated receivables to a newly established asset holding company.
The CCCS confirmed the contractors’ submission that they overlap in the supply of commercial vessels — both newbuild and conversions, mostly for international projects — and the provision of ship repair services in Singapore.
“[However], according to the parties, the proposed combination will not result in a substantial lessening of competition within the relevant markets in Singapore due to the competitive tendering processes for the purchase and repairs of commercial vessels, strong competition from existing global players or new entrants, and presence of large and sophisticated buyers with considerable buyer power,” said the CCCS.
“The parties also submitted that the proposed combination is envisaged to reap multiple synergies which would allow the combined entity to expand its suite of technological capabilities, carry out a wider scope of work, generate greater economies of scale and develop more rigorous project execution capabilities.”
The commission is now inviting public feedstock on the proposed merger and the closing date for submissions is 5pm local time on 15 August.
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