French engineering house Technip and US-based underwater technologies firm FMC Technologies are to combine, creating a new US$13 billion business, the firms announced this morning.
The companies, which firmed a joint venture, Forsys Subsea, last year, have entered into a Memorandum of Understanding (MOU) and expect to execute a definitive business combination agreement to combine the companies in an all-stock merger transaction. In a statement, the firms say the move will "create a global leader that will drive change by redefining the production and transformation of oil and gas."
The combined firm would have more than 49,000 employees operating in over 45 countries. Together, in 2015, Technip and FMC generated combined revenue of about $20 billion. As of March 31, 2016, the two companies together had consolidated backlog of approximately $20 billion.
Other mergers have been happening in the business, including Schlumberger taking over Cameron, after initially forming a joint venture, OneSubsea, and, in the operator sphere, Shell taking over BG Group. However, a mega-merger, between oilfield services giant Halliburton and Baker Hughes fell apart earlier this year following opposition by US competition authorities. M&A has long been seen as a way for the industry to consolidate when under pressure, as it has been in today's low oil price environment.
Thierry Pilenko, Technip Chairman and Chief Executive Officer, who will serve as Executive Chairman of TechnipFMC, stated: "A year ago, we were at the forefront of recognizing the importance of a broader view of our clients' challenges and seized the opportunity that working together in our alliance could bring. Today we want to take this strategy further and across the full footprint of the two companies. We have complementary skills, technologies and capabilities which our customers can access on an integrated basis or separately as they prefer."
The firms say: "TechnipFMC's flexible commercial model will provide both integrated and discrete solutions to customers across the value chain."
John Gremp, Chairman and CEO of FMC Technologies, said: "This is a compelling combination that will create significant additional value for clients and all shareholders, by expanding the success that FMC Technologies and Technip have achieved through our alliance and joint venture, to capitalize on new opportunities and drive accelerated growth."
Doug Pferdehirt, President and Chief Operating Officer of FMC Technologies, will serve as the CEO of TechnipFMC.
Technip shareholders would receive two shares of the new company for each share of Technip, and FMC Technologies shareholders will receive one share of the new company for each share of FMC Technologies. Each company's shareholders will own close to 50% of the combined company.
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