Technip and FMC Technologies have announced that the companies will combine into one company under the name TechnipFMC, which would have an equity value of $13 billion based on pre-announcement share prices.
The companies have entered into a memorandum of understanding (MOU) and expect to execute a definitive business combination agreement to combine the companies in an all-stock merger transaction. Under the terms of the MOU, Technip shareholders will receive two shares of the new company for each share of Technip, and FMC Technologies shareholders will receive one share of the new company for each share of FMC Technologies. Each company’s shareholders will own close to 50% of the combined company.
The combined company will offer comprehensive solutions in subsea, surface and onshore/offshore to reduce the cost of producing and transforming hydrocarbons. With more than 49,000 employees operating in more than 45 countries, TechnipFMC generated in 2015 combined revenue of approximately $20 billion and combined 2015 EBITDA of approximately $2.4 billion. As of 31 March 2016, the two companies together had consolidated backlog of approximately $20 billion.
Technip Chairman and CEO, Thierry Pilenko, will serve as Executive Chairman of TechnipFMC’s Board of Directors. Doug Pferdehirt, currently FMC Technologies’ President and COO, will serve as CEO of TechnipFMC. FMC Technologies announced on 9 May 2016 that Mr Pferdehirt will be appointed as CEO of FMC Technologies effective 1 September 2016.
The Board of Directors will consist of seven members designated by FMC Technologies, including Mr Pferdehirt, and seven members designated by Technip, including Mr Pilenko.
The group will organize its activities into five business units covering surface, subsea services, products, subsea projects, and onshore/offshore, with the first two headquartered in Houston and the others in Paris.
The TechnipFMC senior management team will include executives from both companies. The heads of the above business units have been identified and will be communicated in due course along with the other senior functional and operational executives of the company.
Mr Gremp said, “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.”
Mr Pilenko stated, “Technip and FMC Technologies both have long track records of innovation and commitment to helping their clients meet the challenges of the oil and gas industry. A year ago, we were at the forefront of recognizing the importance of a broader view of our clients’ challenges and seized the opportunity that working together in our alliance could bring. Today we want to take this strategy further and across the full footprint of the two companies. We have complementary skills, technologies and capabilities, which our customers can access on an integrated basis or separately as they prefer. Together, TechnipFMC can add more value across subsea, surface and onshore/offshore, enabling us to accelerate our growth. I am confident that we can quickly demonstrate the power of TechnipFMC to our clients, our people and our shareholders.”
Mr Pferdehirt added, “Our alliance has shown that as customers evaluate solutions, they are involving us in the process earlier and to a greater degree than ever before. The more they seek our recommendations and new products, the more we differentiate ourselves from the competition. This transaction will allow us to deliver even greater benefits to our customers through a broadened portfolio that provides a unique set of integrated technologies and competencies that are underpinned by a history of developing rich partnerships and creating customer success. We look forward to rapidly bringing together the outstanding employees and cultures of both companies, as well as the complementary capabilities of our organizations, to position the combined company at the forefront of a new generation of solutions for the oil and gas industry.”