FMC, Technip in $13bn Merger

FMC Technologies of the US and France’s Technip announced May 19 their intention to merge, creating a new $13bn company, TechnipFMC, that would be a world leader in subsea, surface and offshore contracting, with 2015 revenues of $20bn and a $20bn orders backlog at end-March 2016.

Contractors have been facing pressure, as low oil prices have driven upstream producers to cut project costs. But a merger worth $34bn of US contractors Halliburton and Baker Hughes was called off earlier this month, after US and EU competition regulators complained that it went too far.

Technip and FMC are already arguing that their merger would bring together “complementary” market leaders. It would have an equity value of $13bn based on pre-announcement share prices.

Under the terms of their memo of understanding (MoU), Technip shareholders will receive two shares in the new company for each share of Technip, while FMC shareholders will get one share in the new company for each old FMC share. Each company will own close to 50% of TechnipFMC, which would be listed on both Paris and New York stock exchanges.

TechnipFMC will keep three ‘head offices’ in Paris, Houston and London but will be UK-domiciled. The merger, which has been agreed by both boards, is expected to close early in 2017 subject to shareholder and regulatory approvals.

FMC’s chairman and CEO John Gremp said it represented “a compelling combination that will create significant additional value for clients and all shareholders”. The company’s chief operating officer Doug Pferdehirt would serve as the CEO of TechnipFMC. On May 9, he was already announced as Gremp’s successor with effect from September 1.

Technip chairman and CEO Thierry Pilenko, who would serve as TechnipFMC executive chairman, said, “We have complementary skills, technologies and capabilities which our customers can access on an integrated basis or separately as they prefer.”  Technip has particular strengths in gas processing and liquefaction, and has helped build many of the world's LNG plants including Nigeria LNG and the now under-development Yamal LNG.

Mark Smedley