Sembcorp Marine EGM on Feb 16, new board if shareholders vote for merger with Keppel O&M

SINGAPORE – Sembcorp Marine (Sembmarine) will hold its extraordinary general meeting (EGM) at 11am on Feb 16 for shareholders to vote on its

proposed $4.5 billion acquisition of Keppel Offshore & Marine (O&M).

In a circular dispatched on Tuesday evening to shareholders, the company said that if the proposed merger is approved, it will appoint a new board, with Mr Chris Ong Leng Yeow, current chief executive of Keppel O&M, appointed as the new CEO of the larger Sembmarine. The entire current Sembmarine board, with the exception of deputy chairman Yap Chee Keong, will step down.

Current Sembmarine CEO Wong Weng Sun, who has helmed the company since 2009, will remain as a senior adviser for an interim period.

The company said its current chairman Mohd Hassan Marican will conduct the meeting, which will be held electronically. Shareholders have until Feb 7 to submit relevant questions to be addressed by the board and management prior to the vote.

If the merger is approved by shareholders, Sembmarine will effectively buy the entire Keppel O&M stake from Keppel Corporation for about $4.5 billion, excluding legacy rigs and associated receivables.

Pointedly, the circular also said that if the merger was not approved, there would be “no assurance that as a stand-alone entity, Sembmarine will continue to receive the necessary support from its banks, financiers and significant shareholders, which include Temasek”.

The two companies in April 2022 announced the merger to form what could be one of the world’s largest offshore energy players, as offshore drilling projects dwindled amid a global transition towards renewable energy.

At the time, the proposed one-for-one share exchange between the combined entity and Sembmarine valued Keppel O&M at $4.87 billion, and translated into an exchange ratio of 44 per cent for Sembmarine and 56 per cent for Keppel.

But a revised deal that was $378 million lower than the previous one will now see Sembmarine shareholders get a slightly larger 46 per cent in the combined entity, while Keppel will have its stake reduced to 54 per cent.

Observers and market insiders reckon the revised deal has a much higher chance of securing shareholder approval.

Keppel shareholders gave their nod to the deal on Dec 8, 2022, with an overwhelming vote of 99.96 per cent.

Singapore’s investment company Temasek has given its full support for the proposed merger and agrees that the move will be transformational for both companies.

The merger will bring together the Republic’s two leading offshore and marine energy engineering companies to create a stronger player that can realise synergies and compete more effectively amid the energy transition, Keppel CEO Loh Chin Hua said when the merger was announced.

Mr Hassan said a merger would add resilience to the company by giving it larger operational scale, a broader geographical footprint and enhanced capabilities, enabling it to better capitalise on opportunities in the offshore and marine, renewable and clean energy sectors.

Analysts estimate that the new enlarged entity will kick off with an order book of some $20 billion.

Sembmarine was the second most actively traded stock on the Singapore Exchange on Tuesday, with about 59 million units changing hands as it rose 0.1 cent to 14.2 cents at the market close.