July 24, 2021

10 thoughts on “To Merge Sembcorp Marine and Keppel O&M is NOT up to Temasek and Shareholders alone? Anti-competition Authorities may REJECT!

  1. I miss out one more important major possibility. The recent deal allows Temasek to take the companies private more than the merger.

    This is because in ailing environment, share price will continue to drop and Temasek can just take SCM or KOM private and shrunk the businesses rather than merger for a start.

    This is a more viable immediate solution than merger!

    1. Bulk of customers or potential customers of both companies are all outside Sg! They are oil companies such as Shell, Total, ENI etc Rig n FPSO contractors, Heavy lift contractors, Windfarm owners, shipowners etc!

  2. not a concern for Singapore but article is right that may not pass foreign regulators.

  3. Merger means reduction of half of the combined total workforce! Where can these people go to? I am sure the Gov thought about that…

    1. Yes that is true. But merger does not necessary means reduction of human workforce into half, its the yard capacity that can be reduced. If u see SCM and KOM has too many yards at the moment in Sg, Indo, China, Brazil etc. SCM has 5 yards in Sg, 2 in Indo. KOM has several yards in Sg, China Nantong, America regions as well. Merger reduced cost by cutting cost, but it has more other problems which may reduce efficiency in execution of projects which can cause costs over-runs. The Business part of the picture is often neglected by outsider but both CEOs and the Board will know this problem

  4. It may not be a smooth sailing for the merger due to competition law. However, SCM has the critical knowledge of rig design and may become a good candidate of being acquired by foreign entity. Agree?

    1. Yes not as smooth sailing and not easy as overseas clients (formed bulk of it) can pressured anti-competition watchdogs to reject the deals!

      There are many types of rigs for your info. Keppel has own design of Jack up Rig. SCM acquires Sevan which has cylinder Semi Rig, but they also have their own Jack up design via ex PPL yard, which they are all diff. In fact KOM design of jack up rig is more internationally recognized.

      Not just rig, both companies bulk of revenue also come from FPSO/FPU in recent years And again it’s diff for both companies. KOM only do conversion of FPU, which SCM took on the entire EPC/newbuild of FPU which has higher value but higher risks. There are too many details here, and outsider always thought both companies are exactly the same, but in fact they are diversely different in many businesses.

      By Temasek taking both companies private, perhaps they can organize themselves that one company focus on 1 type of biz (eg FPSO) white another focus on Rig, while another focus on repairs or another focus on ships build… all different

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