KEPPEL CORPORATION LIMITED (SGX:BN4)
Keppel Corporation - Reaches Agreement With Sembcorp Marine On Long-Awaited Merger
- Outperformer so far this year (based on 26 Apr 2022 close).
- Signs definitive agreements for proposed combination of Keppel O&M and Sembcorp Marine (SGX:S51) and realising value from the transactions.
- Positive deal for Keppel Corp; significant step with regards to asset monetisation efforts.
Outperformer so far this year
- Since the start of the year, Keppel Corp's share price has appreciated by about 30% (based on the closing price of S$6.66 on 26 April 2022), significantly outperforming the broader Straits Times Index.
- Besides the strong earnings announcement for the financial year to end-Dec 2021 (FY2021), during which Keppel Corp reported net profit of S$1.02b (highest achieved in the past six years since the O&M downturn), the sector has been buoyed by better industry fundamentals.
Signs definitive agreements for proposed combination of Keppel O&M and Sembcorp Marine
- It has also been announced that Keppel Corp and Sembcorp Marine have signed definitive agreements for the proposed combination of Keppel O&M and Sembcorp Marine. The combined entity will be combined with a restructured Keppel O&M through a separate scheme of arrangement of Keppel O&M. Following this, Keppel O&M and Sembcorp Marine will become wholly-owned subsidiaries of the combined entity.
- Concurrently, Keppel O&M will sell its legacy rigs and associated receivables to an asset company that will be 10%-owned by Keppel Corp and 90%-owned by other investors, and transfer other out-of-scope assets to Keppel Corp.
Breakdown of shareholding
- Keppel Corp and its shareholders would own 56% of the Temasek will hold 33.5% and be the largest shareholder of the combined entity.
Realising value from these transactions
- According to management, the proposed transactions, on a pro-forma basis, would allow Keppel Corp to deal for Keppel Corp, and see it as a significant step with regards to its asset monetisation efforts.
Proposed combination subject to various approvals and will take time; EGMs in 4Q22
- Besides regulatory approvals, the proposed combination will also be subject to the approvals of the shareholders of Keppel Corp and Sembcorp Marine at separate EGMs, which are expected to be convened in 4Q22. The combined entity will adopt a new name and brand identity to reflect its focus on offshore renewables, new energy and cleaner solutions in the O&M sector.
- See
OCBC Research Team
OCBC Investment Research
|
https://www.iocbc.com/
2022-04-28
SGX Stock
Analyst Report
8.78
UP
7.000
