Technip and FMC to merge

FRENCH oil services firm Technip and US rival FMC Technologies have signed a memorandum of understanding to merge in an all-stock deal.

The merged company will be known as TechnipFMC, and will have an equity value of around US$13bn. The pair already have a joint venture, Forsys Subsea, which focuses on field development and offers early concept front end engineering and design (FEED), well surveillance, monitoring and advisory services, and has joint research and development programmes to boost efficiency and lower development costs. The companies say the merger will build on the success of the joint venture and will create a market leader in the subsea, surface and onshore/offshore sectors.

TechnipFMC will be organised into five business units – Surface, Subsea Services, Products, Subsea Projects, and Onshore/Offshore. Surface and Subsea Services will be headquartered in Houston, US, while the rest will be headquartered in Paris, France. It will be domiciled in London, UK, where the Forsys Subsea JV is currently based. The combined company is expected to save US$400m/y in pretax cost synergies. The companies have a backlog of US$20bn, giving an assured mid-term income stream.

Technip’s current chairman and CEO Thierry Pilenko, will become executive chairman of TechnipFMC. Its CEO will be Doug Pferdehirt, who is currently president and COO at FMC.

“Our alliance has shown that as customers evaluate solutions, they are involving us in the process earlier and to a greater degree than ever before. The more they seek our recommendations and new products, the more we differentiate ourselves from the competition.  This transaction will allow us to deliver even greater benefits to our customers through a broadened portfolio that provides a unique set of integrated technologies,” said Pferdehirt.

The two companies’ combined 2015 revenue was US$20bn and between them they employ 49,000 employees in 45 countries. Technip shareholders will receive two shares of TechnipFMC for each share they hold, while FMC shareholders will receive one share. The shares will be more or less evenly split between Technip and FMC shareholders. The transaction was unanimously approved by both companies’ boards of directors.

Subject to regulatory approvals and shareholder consent, the merger is expected to be completed by early 2017.