OPINION: Will they, won’t they…

The tie-up of Singapore’s leading offshore and marine contractors — Sembcorp Marine and Keppel Offshore & Marine — had been mooted for decades by industry observers.

With Keppel O&M historically being the world’s leading jack-up rig builder and Sembmarine’s traditional focus more on platform construction, the two had complementary skillsets and no doubt synergies could have been achieved.

Today, the two Lion City-headquartered contractors often find themselves competing for the same prize, especially when it’s a tempting $1 billion-plus newbuild floating production, storage and offloading unit up for grabs.

But the duo earlier this year finally decided that the whole would be greater than the sum of its two parts, paving the way for a Singapore mega-contractor with multiple domestic and international yards and many thousands of employees and subcontractor personnel.

Taking that decision was one thing, but obtaining the required shareholder and regulatory approvals for the touted merger potentially stood in the way.

Fast forward to late October and the companies concluded and agreed that the way forward would be for Sembmarine to acquire Keppel O&M, a move that could reduce domestic bureaucracy and the completion time.

The acquisition will still require the approval of the majority of the contractors’ shareholders, so it is by no means a given that the transaction will go ahead as planned.

However, it seems likely that soon, perhaps as early as the end of the year, that the global contracting arena will have a Singaporean behemoth to compete with.

And who knows, maybe a behemoth that could itself acquire rivals.

(This is an Upstream opinion article.)

Never miss a must-read story
Get notified when we publish articles from your selected sectors, businesses or journalists.