Keppel, Sembcorp in merger talks

June 24, 2021
Discussions on the potential combination of Keppel O&M and Sembcorp Marine are expected to take several months.

Offshore staff

SINGAPORE – Keppel Corp. Ltd. and Sembcorp Marine Ltd. have entered a non-binding memorandum of understanding to discuss merging Keppel Offshore & Marine and Sembcorp Marine.

Under the MOU, it is envisaged that Keppel and the combined entity will enter into a strategic partnership, a 50-50 joint venture. This would allow Keppel to continue accessing Keppel O&M’s capabilities required for its projects, on terms to be agreed. The scope of the strategic partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the combined entity will be the preferred EPC partner for Keppel’s projects.

The companies said mutual due diligence and discussions are expected to take several months. If completed, it is envisaged Sembcorp Marine’s shareholders will hold shares in the combined entity. Keppel will receive shares in the combined entity and a cash consideration of up to S$500 million ($372 million).

Keppel has also signed a non-binding MOU with Kyanite Investment Holdings Pte Ltd, a wholly owned subsidiary of Temasek, for Keppel O&M’s legacy rigs and associated receivables to be sold to a separate Asset Co that would be majority owned by external investors. The two proposed transactions will be inter-conditional and pursued concurrently.