McDermott rejects takeover bid of Subsea 7

mergerThe US-based engineering company McDermott has rejected Subsea 7’s offer to acquire its entire issued share capital for US$7 per share

The UK-based subsea engineering company Subsea 7, one of the front-runners in Africa’s oil and gas sector, submitted an offer to acquire McDermott’s common stocks to expand its reach in the global market for subsea umbilicals, risers and flowlines (SURF).

Both Subsea 7 and McDermott have significant presence in Africa’s major oil and gas projects. Recently, Subsea 7 has received an engineering contract to build 20km Corrosion Resistant Alloy (CRA) pipeline in offshore Nigeria. In 2017, Subsea 7 was awarded a contract by Ophir Energy for the Fortuna LNG project offshore Equatorial Guinea. Besides these, the company has presence in other oil and gas projects across African nations including Mozambique, Angola, Ghana, Senegal etc.

In March 2018, McDermott International Inc and Baker Hughes, a GE company (BHGE), were awarded a contract for the Tortue/Ahmeyim offshore gas project from British oil major BP.

In a press release, Subsea7 said that the proposed merger with McDermott is expected to boast a combined market share of 24 per cent in global SURF market, with TechnipFMC following at 20 per cent and Saipem at 15 per cent, said Subsea 7, according to Rystad Energy.

Martinsen further added, “Subsea 7 does have presence in the Middle East market with its acquisition of Emas Chiyoda’s subsea business, but that region still only represents less than five per cent of its business. With the McDermott business, it would grow to 15 per cent for the combined entity.”

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