SINGAPORE Government-owned Temasek Holdings has made a SGD4.1 billion (US$3 billion) offer for majority control of Keppel Corp, and the sovereign-wealth fund plans to merge the shipyard with rival Sembcorp Marine Ltd.
The move is seen as a response to consolidation in the ship construction sector in South Korea and China, people familiar with the matter said. It would also mark the biggest action in the maritime business for Temasek, which has a $230 billion portfolio that includes shipping, airlines, real estate, energy and bank investments, since it sold Singapore flag carrier Neptune Orient Lines to French shipping giant CMA CGM for $2.4 billion in 2015, reports the Wall Street Journal report.
Keppel and Sembcorp Marine both specialise in building offshore rigs. That business has foundered in recent years as a surge in shale oil production in the US has made it difficult for offshore oil explorers to compete.
Temasek already owns nearly 21 per cent of Keppel, which also counts private-equity groups BlackRock Inc and Vanguard Group as investors. The latest offer would boost Temasek's holding share in the company to 51 per cent.
'Offshore drilling is looking up, but it needs investment,' said a person involved in the matter, who asked not to be named because they weren't authorised to talk to the media. 'There are no decisions yet, but the plan is to look into a merger with Sembcorp Marine following extensive yard consolidation in China and Korea. But if it doesn't work, Sembcorp Marine may be privatised.'
Other options may be examined aside from privatisation, another person said.
Temasek owns 49.5 per cent of Sembcorp Industries Ltd, a global business including logistics warehouses, infrastructure, energy generation and utilities whose holdings include Sembcorp Marine.
'The partial offer reflects our view that there's inherent long-term value in Keppel's businesses, notwithstanding the challenges presented by the current business and economic outlook,' Tan Chong Lee, president of Temasek International, said in a statement.
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The move is seen as a response to consolidation in the ship construction sector in South Korea and China, people familiar with the matter said. It would also mark the biggest action in the maritime business for Temasek, which has a $230 billion portfolio that includes shipping, airlines, real estate, energy and bank investments, since it sold Singapore flag carrier Neptune Orient Lines to French shipping giant CMA CGM for $2.4 billion in 2015, reports the Wall Street Journal report.
Keppel and Sembcorp Marine both specialise in building offshore rigs. That business has foundered in recent years as a surge in shale oil production in the US has made it difficult for offshore oil explorers to compete.
Temasek already owns nearly 21 per cent of Keppel, which also counts private-equity groups BlackRock Inc and Vanguard Group as investors. The latest offer would boost Temasek's holding share in the company to 51 per cent.
'Offshore drilling is looking up, but it needs investment,' said a person involved in the matter, who asked not to be named because they weren't authorised to talk to the media. 'There are no decisions yet, but the plan is to look into a merger with Sembcorp Marine following extensive yard consolidation in China and Korea. But if it doesn't work, Sembcorp Marine may be privatised.'
Other options may be examined aside from privatisation, another person said.
Temasek owns 49.5 per cent of Sembcorp Industries Ltd, a global business including logistics warehouses, infrastructure, energy generation and utilities whose holdings include Sembcorp Marine.
'The partial offer reflects our view that there's inherent long-term value in Keppel's businesses, notwithstanding the challenges presented by the current business and economic outlook,' Tan Chong Lee, president of Temasek International, said in a statement.
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