An overview of the Technip-FMC Technologies deal
On May 19, FMC Technologies (FTI), a Texas-based oilfield service and equipment (or OFS) company, disclosed that it will combine with Technip, a France-based OFS company. The two companies have entered into a memorandum of understanding (or MOU) to create a combined company called TechnipFMC. The transaction remains subject to various regulatory approvals.
FTI expects to combine with Technip through an all-stock merger transaction. The FMC Technologies-Technip deal will offer solutions in subsea, surface, and onshore and offshore energy production.
How Did FTI’s share price react to merger news?
On May 19, FMC Technologies’ share price declined by 4.7% compared to the previous day’s close. Crude oil prices remained nearly unchanged on the day. On August 26, 2015, the day that the Schlumberger (SLB) and Cameron International merger deal was announced, SLB’s share went down 3.4%.
Financial terms of transaction
TechnipFMC, the combined company, will have an equity value of $13 billion. Under the terms of the MOU, Technip shareholders will receive two shares of TechnipFMC for each share of Technip. FTI shareholders will receive one share of TechnipFMC for each share of FTI. FTI and Technip shareholders will own ~50% of the combined company. FTI makes up 0.04% of the SPDR S&P 500 ETF (SPY).
Recent OFS merger precedent
On April 1, Schlumberger Limited (SLB), the largest OFS company by market capitalization, acquired Cameron International, its industry peer. The transaction combined two complementary technology portfolios into a pore-to-pipeline products and services offering in the global oil and gas industry. Read more about the SLB-CAM merger in Market Realist’s Wedding Season in Energy OFS: SLB’s Proposed Acquisition of CAM.
Next, we’ll discuss revenues and income of FMC Technologies and Technip.