Mega merger of Sembmarine, Keppel O&M simplified to ensure deal certainty, quicker completion

THE mammoth plan to merge Singapore’s home-grown offshore and marine (O&M) giants Sembcorp Marine (Sembmarine) and Keppel Corp ’s O&M unit has been drastically simplified, with Sembmarine gaining a sweeter deal, six months after the details of the merger were first revealed.  Greater deal certainty and speed to close the proposed merger of Sembmarine and Keppel O&M – set to create a powerhouse with a sizeable net order book of S$18 billion – plus a rosier sector backdrop and uncertain macro headwinds were cited by top officials from both companies as the rationale for the revised transaction structure and terms.

Most significantly, Sembmarine will directly acquire Keppel O&M (KOM) from Keppel Corp at an improved equity-value exchange ratio (46:54 versus the earlier 44:56 SembMarine:KOM). This translates to an 8 per cent or S$378 million reduction to S$4.50 billion for the purchase consideration of KOM.

Sembmarine will also retain its listing status on the Singapore Exchange mainboard, and directly issue 36.8 billion new shares to Keppel. These new shares have been reduced by 3.1 billion – some 10 per cent of Sembmarine’s market capitalisation.