Temasek-backed oil rig builders agree $6.3 bln merger amid sector downturn

Industry:    2022-04-28

Singapore’s Sembcorp Marine (Sembmarine) has agreed to a S$8.7 billion ($6.29 billion) merger with Keppel Corp’s larger offshore and marine unit, a year after the Temasek-backed firms began deal talks amid an industry downturn.

The loss-making oil rig builders have been whiplashed by years of oversupply, oil price volatility and a drop in new orders.

Such troubles have been exacerbated by the global transition toward renewable energy, consolidation at Chinese and South Korean rivals and major disruptions during the COVID-19 pandemic, when oil prices fell.

The combination “brings together two leading O&M companies in Singapore to create a stronger player that can realise synergies and compete more effectively amidst the energy transition,” Keppel CEO Loh Chin Hua said.

The downturn increased competition for a shrinking pool of projects, driving up industry debt levels and leading Sembmarine to raise S$3.6 billion of equity over the past two years, with strong backing by Singapore state investor Temasek (TEM.UL).

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