An agreement on the proposed merger between Singapore shipyard giants Keppel Offshore & Marine (Keppel O&M) and Sembcorp Marine should be struck by the end of April 2022. However, while significant progress has been made in advancing the deal that would create a mega-yard group, the pair said yesterday there “is no guarantee that definitive agreements will be executed.”
Although the companies had previously guided that definitive agreements would be achieved by the end of 2021, or early 2022, Loh Chin Hua, chief executive of Keppel Corporation, Keppel O&M’s parent, said in late January that it was a “highly complex” transaction and both sides were taking more time in doing due diligence.
Keppel and Sembcorp Marine said in a statement yesterday that they wished to update their respective shareholders that “significant progress has been made on advancing the Proposed Combination, including mutual due diligence, the transaction structure, exchange ratio and other related matters.”
“In response to the dramatic changes in the global offshore & marine engineering and energy sectors in recent years, the objective of the Proposed Combination is to create a stronger Combined Entity, leveraging respective strengths to realise synergies and deliver sustainable value over the long term for shareholders.
Both parties are devoting considerable resources to progressing the Proposed Combination. However, more time and deliberation will be required to complete due diligence, reach mutual agreement on the transaction terms and finalise definitive legal documentation. Both parties are committed to continue with exclusive negotiations and work towards a definitive agreement by 30 April 2022.
Keppel also wishes to update that significant progress has been made on advancing the sale of Keppel O&M’s legacy rigs and associated receivables to a separate company (“Asset Co”) that would be majority owned by external investors. As previously announced, this Asset Co transaction and the Proposed Combination will be inter-conditional and are being pursued concurrently.
Each of Keppel and Sembcorp Marine will provide further updates in due course. In the meantime, the companies would like to emphasise that while discussions in relation to the Proposed Combination and the Asset Co transaction are ongoing, there is no guarantee that definitive agreements will be executed. Furthermore, any definitive agreements that the companies may agree upon will also be subject to conditions including relevant regulatory and shareholder approvals.”