Oil service companies FMC and Technip announced a plan to merge in an all-stock deal worth about $13 billion to create a larger player in the energy services sector.
The Houston-based FMC Technologies and the Paris-headquartered Technip will combine to form TechnipFMC. FMC investors will get one share in the company, while those with Technip shares will get two, the companies said. The combined company will have more than 49,000 employees operating in 45 countries. And the headquarters will be based in Paris.
This is the latest deal to reshape the oil service industry, following the completion of the Schlumberger’s (ticker: SLB) acquisition of Cameron International. The news comes just two weeks after two industry behemoths – Halliburton and Baker Hughes – facing resistance the U.S. Justice Department over monopoly concerns, abandoned a $35 billion merger agreement.
Both companies are leaders in oil and gas industry services, which include onshore and offshore drilling and subsea construction. It will combine FMC Technologies’ expertise in manufacturing underwater equipment with Tenchnip’s broad construction expertise. “This is a compelling combination that will create significant additional value for clients and all shareholders, by expanding the success that FMC Technologies and Technip have achieved through our alliance and joint venture, to capitalize on new opportunities and drive accelerated growth,” said FMC Technologies Chairman and CEO John Gremp in a statement.
Companies in the energy sector are trying to drive down costs and have laid off thousands of workers because of tumbling oil and natural gas prices. The two companies, which had a combined $20 billion in revenue in 2015, expect to realize at least $400 million in annual pretax cost synergies in 2019.
FMC and Technip expect the deal to close in early 2017. Technip Chairman and CEO Thierry Pilenko will become chairman of the combined company. Doug Pferdehirt, currently FMC’s president and chief operating officer, will become CEO of the combined company. Pferdehirt is already slated to become CEO of FMC on Sept. 1.
