More time and deliberation is needed, although "significant progress" was made, to advance the proposed combination between Keppel Offshore & Marine (O&M) and Sembcorp Marine (SembMarine), Keppel Corp and SembMarine said yesterday.
Giving the update in a bourse filing some nine months after first announcing talks on potentially combining the entities, the parties said they still need to complete due diligence, reach mutual agreement on the transaction terms and finalise definitive legal documentation.
Both parties have thus committed to continue with exclusive negotiations and work towards a definitive agreement by April 30, they noted, adding that "considerable resources" are being devoted to progressing on it.
When announcing the start of the talks on June 24 last year, the parties had said the combined entity would be better placed to compete for larger contracts and pursue synergies arising from combined scale, footprint and capabilities.
Yesterday, Keppel and SembMarine reiterated that the move was in response to "dramatic changes" in the global offshore and marine engineering and energy sectors in recent years.
"The objective of the proposed combination is to create a stronger combined entity, leveraging respective strengths to realise synergies and deliver sustainable value over the long term for shareholders," they added.
Keppel also took the chance to give a further update on its efforts to sell Keppel O&M's legacy rigs and associated receivables to a separate company that would be majority-owned by external investors.
"Significant progress" has been made to this end, it said, adding that the transaction and proposed combination will be inter-conditional and are being pursued concurrently.
Keppel and SembMarine will give further updates on the potential combination in due course, they said.
In the meantime, the companies emphasised that while discussions in relation to the proposed combination and the transaction are ongoing, there is no guarantee that definitive agreements will be executed.
They added that any definitive agreements that the companies may agree upon will also be subject to conditions including relevant regulatory and shareholder approvals.
Shareholders are thus advised to exercise caution when dealing with their shares and other securities of the companies as there is "no certainty or assurance" that the proposed combination and transaction will be undertaken, they stressed.
Before the announcement was made yesterday evening, Kep-pel's shares were down 1.1 per cent at $6.42, while SembMarine's shares were down 1 per cent at 9.8 cents.
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