Is Sembmarine's rights issue to position it for a cash-depleting merger with Keppel O&M?

IF Sembcorp Marine (Sembmarine) was hoping that the possibility of a merger with the offshore and marine (O&M) arm of Keppel Corp would soften the blow of its S$1.5 billion rights issue, it was clearly mistaken.

Since it announced the two corporate moves just over a week ago, its already depressed shares have tumbled nearly 35 per cent. The stock closed at 12.5 Singapore cents on Friday.

Market talk of a merger between Sembmarine and Keppel O&M has surfaced from time to time, on the premise that it would enable the two companies to better compete for business globally.