Technip, FMC Technologies Said in Advanced Merger Talksby and
Oilfield-services providers may announce deal this year
Companies revealed an offshore joint venture in March
Negotiations between the two companies, who formed a joint venture earlier this year, are at an advanced stage and a transaction may be announced before the end of 2015, the people said, asking not to be identified as the information is private. No final deal has been reached and talks may still fall apart, they said.
Combining FMC Technologies and Technip would bring together the largest provider of subsea equipment to the industry with Europe’s biggest oil-services provider, at a time when the slump in oil prices has led customers to cut new projects and put pressure on suppliers. FMC Technologies has a market value of about $7.2 billion, after its shares fell more than 33 percent this year. Technip, which is down 8.2 percent year-to-date, is valued at about $5.8 billion.
The deal may be structured as an inversion, one of the people said, which may allow Houston-based FMC to move its headquarters to a country with lower taxes. While Technip is based in Paris, the combined company would not have to choose France as its tax domicile.
A spokesman for Technip couldn’t immediately be reached for comment. A representative for FMC Technologies didn’t immediately respond to requests for comment.
The companies in March announced a joint venture for offshore fields, called Forsys Subsea, as they seek to cut costs.
“The industry has a serious problem,” FMC Technologies Chief Executive Officer John Gremp said on a conference call at the time of the announcement. “Oil companies have invested and planned that their future production will come from deep water. They’ve seen their returns decline and that’s not sustainable.”
Schlumberger Ltd., the world’s largest oilfield services provider, laid out the road map for this kind of deal earlier this year, when it announced a deal to buy out its JV partner Cameron International Corp. FMC Technologies, a direct competitor to Cameron, climbed to the highest intraday level in five years on the day the Schlumberger deal was announced.
Oilfield service and equipment companies were the first to feel the pain from a crude oil market crash that began in June 2014. As crude prices plunged by more than half, explorers were forced to slash more than $250 billion in spending this year, leading to more than 250,000 in global energy industry layoffs, mostly by service companies.
FMC Technologies rose 2.3 percent at the close in New York Monday, while Technip closed 3.6 percent higher in Paris. Talks between Technip and FMC Technologies were earlier reported by Reuters.