Sembcorp Marine will complete the proposed combination with Keppel O&M via a direct acquisition with improved terms



  • Simplified transaction structure via direct acquisition of Keppel O&M by Sembcorp Marine reduces consent and approval requirements and can reduce lead time by up to two months
  • Acquisition of Keppel O&M for 8% lower consideration with a revised equity value exchange ratio of 46:54 (SCM:KOM) from previous ratio of 44:56 (SCM:KOM)
  • Revised structure and terms underscore the parties’ commitment to establishing the expanded entity as soon as possible to better seize opportunities in the improving industry landscape

Sembecorp Marine entered a Amended and Updated Master Combination Agreement with Keppel Company which sets out the revised transaction structure and terms upon which the proposed combination of Sembcorp Marine and Keppel Offshore & Marine (“Keppel O&M”) will be effected.


The key elements of the revised structure and conditions are as follows:

Simplified transaction structure

Under the revised structure and terms, Sembcorp Marine will now acquire 100% of Keppel O&M directly from Keppel. There will no longer be a Combined Entity, and the proposed one-for-one share exchange between the Combined Entity and Sembcorp Marine, and the transfer of listing status from Sembcorp Marine to the Combined Entity (collectively, the first ‘Sembcorp’ marine project which required the agreement of certain third parties and the approval of voting shareholders representing a majority of the workforce holding at least 75% in value) will no longer apply.

Sembcorp Marine will retain its listed status on the Mainboard of the Singapore Stock Exchange and issue new Sembcorp Marine shares directly to Keppel, if approved by minority shareholders. Following completion of the transaction, Keppel O&M will become a wholly owned subsidiary of Sembcorp Marine. The time to close the Transaction may also be reduced by up to two months.

Improved equity value exchange ratio

Under the revised terms, Sembcorp Marine achieved an improvement in the equity value exchange ratio to 46:54 (SCM:KOM) from the previous 44:56 (SCM:KOM). This means that upon closing, Sembcorp Marine shareholders will own 46% of the expanded Sembcorp Marine, and Keppel and its shareholders will own 54%.

Significant initial improvement in shareholder value

Improved equity value exchange ratio translates to an 8% improvement over Keppel O&M’s previous purchase consideration announced on April 27, 2022. This equates to a reduction of $378 million S$4.50 billion from the Keppel O&M acquisition consideration compared to the previous S$4.87 billion. . The number of new Sembcorp Marine shares to be issued will be reduced by 3.1 billion, which is equivalent to approximately 10% of the market capitalization of Sembcorp Marine(1).

Change in retained interest

Keppel will retain 5% of the expanded shares of Sembcorp Marine as a retained interest, instead of 10% in the combined entity based on the previous terms. Keppel will distribute 49% of the enlarged shares of Sembcorp Marine (instead of 46% in the combined entity) in cash to its shareholders.


Uncertain macroeconomic environment

Since the announcement of the Proposed Combination on April 27, 2022, conditions in the O&M sector have improved, as evidenced by the recent orders won by the two companies. However, macroeconomic conditions deteriorated at the same time amid high levels of inflation and continued interest rate hikes by major central banks. Amid these volatile and uncertain times, the parties believe it is essential that the Proposed Combination be completed as soon as possible so that the benefits of an enlarged entity can be realized sooner. Besides the expected synergies, an expanded Sembcorp Marine will be in a better position to face the above challenges and compete with global competition.

Simplified transaction structure and process

The simplified transaction structure significantly reduces transaction complexity and minimizes certain third-party consent requirements, including from lenders. This could reduce the turnaround time by up to two months.

Significant improvement in shareholder value for Sembcorp Marine

The revised equity value exchange ratio provides significant initial value improvement to existing Sembcorp Marine shareholders as fewer shares will be issued for the Keppel O&M acquisition. In addition to the S$378 million value enhancement for Sembcorp Marine shareholders (corresponding to approximately 10% of Sembcorp Marine’s market capitalization), existing Sembcorp Marine shareholders will also retain a larger stake in the expansion of Sembcorp Marine when completed.

Following completion of the Transaction and following the Keppel Cash Distribution, Temasek will remain the largest shareholder of Sembcorp Marine with a 35.5% stake, compared to 54.6% currently(2).

Greater value for all stakeholders

The expansion of Sembcorp Marine will create greater value for all stakeholders. As a single organization, the collective workforce will benefit from expanded opportunities for career development and growth in renewable energy, new energy and cleaner O&M solutions. It will also strengthen Singapore’s position as a maritime and offshore and maritime hub.

Tan Sri Mohd Hassan Marican, Chairman of Sembcorp Marine, said, “With the proposed combination, we hope to preserve Singapore’s marine and offshore engineering ecosystem and key industry capabilities developed over decades by two local companies that have become established global players.”

“An expanded Sembcorp Marine is better placed to advance Singapore’s O&M and maritime interests and increase the sector’s potential as a growth engine for the economy, creating jobs and business opportunities; as well as spearheading the country’s expansion into adjacent renewable energy and new offshore energy markets, alongside the global transition to a low-carbon economy.


Under the revised structure and terms which are final, Sembcorp Marine will acquire Keppel O&M directly from Keppel. As indicated in the April 27, 2022 announcement, the acquisition of Keppel O&M will exclude (i) Keppel O&M’s legacy platforms and associated receivables, which will be sold to a separate asset company, and (ii) certain Off-field assets primarily comprising Keppel O&M’s interests in Floatel International Ltd and Dyna-Mac Holdings Ltd, which will be retained by Keppel.

In addition, immediately prior to the completion of the transaction, Keppel O&M will pay S$500 million in cash to settle outstanding interest and effect a partial redemption of certain perpetual securities previously issued to Keppel.

In consideration for its acquisition of Keppel O&M, Sembcorp Marine will issue new shares to Keppel and its shareholders representing 54% of the shares of the expanded Sembcorp Marine. Upon completion of the Proposed Combination, Keppel will distribute shares representing 49% of the expanded Sembcorp Marine in kind to its shareholders and will retain a 5% interest in the expanded Sembcorp Marine.

As indicated in the April 27, 2022 announcement, the retained interest will be placed in a separate account to fund claims, if any, relating to certain identified contingent liabilities for a period of up to 48 months from realization. of the proposed reconciliation. This separate account will be managed by an independent third party who will have the power to monetize the Retained Participation based on predefined parameters.

Sembcorp Marine has agreed to indemnify Keppel for certain identified contingent liabilities for a period of up to 24 months from the completion of the Proposed Combination.

Other simultaneous agreements

As indicated in the April 27, 2022 announcement, in conjunction with the proposed combination, Keppel will enter into a definitive agreement with Baluran and Kyanite Investment Holdings, an indirect wholly-owned subsidiary of Temasek, for the sale of the Keppel O&M legacy platforms and receivables associated with a new and separate entity.

Asset Co and Keppel O&M will also enter into a master services agreement under which the enlarged Sembcorp Marine, through Keppel O&M, will provide construction, berthing and maintenance, and other associated services for the legacy platforms held by Asset Co for an initial period of 10 years.

Sembcorp Marine and Keppel will continue to explore opportunities for future collaboration in areas such as floating data centers and floating infrastructure solutions.

Calendar and approvals

The independent directors of Sembcorp Marine have separately engaged an independent valuator and an independent financial advisor in connection with the Proposed Combination.

The reports of Sembcorp Marine’s Independent Advisors will be presented to Sembcorp Marine shareholders when seeking approval of the Proposed Combination.

Sembcorp Marine will seek shareholder approval for the proposed combination through a direct acquisition of Keppel O&M.

Keppel will also seek shareholder approval for the Keppel O&M divestiture, the Asset Co transaction and the in-kind distribution of shares in the expanded Sembcorp Marine that Keppel is receiving.

Subject to obtaining all regulatory approvals and other consents, Sembcorp Marine intends to hold its extraordinary general meeting in December 2022 or January 2023. If there are any delays in obtaining such approvals and consents , there will be substantial delays in the date of the extraordinary general meeting. Meet.

Temasek, majority shareholder of Sembcorp Marine and Keppel, will abstain from voting in all resolutions relating to the foregoing.

The Proposed Combination is also subject to other customary closing conditions and approvals.

Further details of the Proposed Combination can be found in Sembcorp Marine’s announcements, which are available at and on the companies’ respective websites.

Financial advisors

Credit Suisse (Singapore) Limited is the financial advisor to Sembcorp Marine in connection with the proposed combination.

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Source: Sembcorp Marine


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