Two large oil services companies, FMC Technologies Inc. (NYSE: FTI) and its rival, Technip SA, announced that they planned to merge to a new company named TechnipFMC valued at $13 billion, which will form a new competitor in an energy industry and would become a potential competitor to the world’s largest oil-services companies, Halliburton Co. and Schlumberger Ltd. This merger is aim at reducing cost at a time of lower oil and gas prices over the world, which expected to save pretax savings at least $400 million annually from the all-stock deal by 2019.
In the joint statement, the two companies had combined revenue of $20 billion in 2015 that greater than Baker Hughes Inc., and would have more than 49,000 employees in 45 countries. FMC investors will get one share in the new company for each they own, while Technip stockholders will get two. The new entity will be based in Paris, Huston and London, which specifically Technip is mainly located in Paris in the demanding and costly work of developing offshore oil and gas fields and FMC will based in Houston for the maker of energy equipment. Mr. Pilenko is to become the merged company’s executive chairman. FMC President and Chief Operating Officer Doug Pferdehirt is to become its CEO. The new TechnipFMC would be listed on the New York and Paris stock exchanges.
After the announcement of merger between FMC Technologies Inc. and Technip SA, the Technip’s shares were up 6% at €49.49 ($55.25) in Paris on Thursday, while FMC dropped about 3% at $27.72 in midday trading in New York. Technip has a market value of about $6.2 billion, compared with $6.5 billion for FMC Technologies. Technip has annual revenue of $13.5 billion, more than double that of FMC Technologies.
“For every oil-service company globally, tackling existential strategic questions needs to become the defining feature of 2016. Technip and FMC today are among the first to do so,” said by Jordan Patel at Sanford C. Bernstein & Co.