Prosafe and Floatel have agreed to an all-share merger that they say will create the world’s largest offshore accommodation company.

In a "merger of equals", the two companies said Prosafe will acquire Floatel with consideration in Prosafe shares, whereby Floatel’s principal shareholders will become large shareholders in Prosafe.

The combined company will have Prosafe’s existing nine semi-submersible vessels and options for two newbuild semisub vessels with Floatel’s five semisub vessels.

If all conditions are met, the merger is expected to be completed in the third quarter of 2019.

The motivation to merge was driven by "fundamental and lasting changes" in the offshore accommodation market in the wake of the oil price drop in 2014, said the two companies.

Lower activity in exploration, production and maintenance, combined with extensive efficiency improvements among the oil companies has led to significantly intensified competition for “beds at sea”.

"The need for consolidation in oil services is well known. We consider this transaction not only strategically sound, but also necessary to adapt to the significant changes in our markets and competitive landscape in recent years," said Glen Ole Rodland, chairman of Prosafe SE.

For the year ended 31 December 2018, the combined company had revenues of more than US$600 million and earnings before income tax depreciation and amortisation of more than US$300 million.

The combined firm contract backlog as at 31 March 2019 is US$225 million. In addition, Prosafe has just landed a three-year contract for the Safe Eurus in Brazil that adds about US$80 million to the backlog, while Floatel was recently awarded a four-month extension at Martin Linge that adds US$22 million to the backlog.

The name of the combined company will be Prosafe SE, and its shares will continue to be listed on the Oslo Stock Exchange.

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Merger of equals for Prosafe and Floatel