Technip and FMC Technologies agreed to merge in an all-stock deal, creating a US$13 billion company as the oil-services industry responds to crude’s collapse.
Technip stockholders will get two shares in the new business, TechnipFMC, for every Technip share held, while FMC investors will get one, the companies said Thursday in a joint statement. They expect the combination to deliver at least $400 million in annual pretax savings in 2019.
The new oil-services company, based in Paris, Houston and London, will have an equity value of $13 billion, according to the statement. Technip Chief Executive Officer Thierry Pilenko will be executive chairman while Doug Pferdehirt, president and chief operating officer of FMC, will serve as CEO. Each company’s shareholders will own close to 50 per cent of the combined group.
Technip jumped 13 per cent to €52.61 in Paris trading at 9:19am local time. The French company has lost a quarter of its value over the past year, while FMC has tumbled more than 30 per cent in New York.
Oil-services companies have seen orders, revenue and earnings come under pressure as the slump in crude prices prompted energy producers to defer or cancel projects to cut costs. Halliburton and Baker Hughes, the second and third-largest oil-service providers, tried to merge before calling off the planned deal this month after meeting stiff resistance from regulators in the United States and Europe.
“Together, TechnipFMC can add more value across subsea, surface and onshore/offshore, enabling us to accelerate our growth,” Mr Pilenko said.
Technip and FMC had combined sales of about $20bn last year and earnings before interest, taxes, depreciation and amoritisation of about $2.4bn, according to the companies. They had a total order backlog of $20bn at the end of March.
Technip and FMC expect the deal to close in early 2017, subject to shareholder and regulatory approvals.
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