Keppel and Sembcorp Marine in merger talks to face "dramatic" market changes

Keppel Corporation Limited and Sembcorp Marine Ltd announced on Thursday that they have entered into a non-binding memorandum of understanding (MOU) to enter into exclusive negotiations for a possible merger, in response to “dramatic changes” in the global offshore and marine (O&M) engineering and energy sectors.

The companies said in the statement that the potential combination would create a stronger player to capitalise on growing opportunities in the O&M, renewable and clean energy sectors. “By combining the complementary strengths of both businesses, the Combined Entity would be able to accelerate the companies' pivot towards O&M renewables opportunities. The Combined Entity would be better positioned to compete for larger contracts, whilst pursuing the synergies that can arise from the increased operational scale, broader geographic footprint and enhanced capabilities of a larger entity,” said the statement.

The companies pledged to work cooperatively with their workplace unions on the future plans for the labour force, including “continuing workforce development and training and the creation of higher value-adding jobs,” the statement said.

If the merger takes place; the company will be listed in Singapore and Sembcorp Marine’s shareholders will hold shares. Keppel will receive shares in the combined Entity and a cash consideration of up to S$500 million (or a cash component with the economic equivalent effect).

They said that there will be a focus on preserving operational strengths; moreover, continuing to attract and retain local talent, supplemented by international expertise in these specialised engineering fields.

The International Energy Agency (IEA) have recently called for worldwide investment in clean energy to triple by 2030, to nearly US$5 trillion per annum.