Technip and FMC Technologies today revealed the two firms would merge to create TechnipFMC – a new company with an equity value of $13billion.
The move would save the firms $600million, according to today’s announcement.
Thierry Pilenko, Technip’s chairman and chief executive, will serve as the new company’s executive chairman.
He said: “Technip and FMC Technologies both have long track records of innovation and commitment to helping their clients meet the challenges of the oil and gas industry.
“A year ago we were at the forefront of recognizing the importance of a broader view of our clients’ challenges and seized the opportunity that working together in our alliance could bring.
“Today we want to take this strategy further and across the full footprint of the two companies. We have complementary skills, technologies and capabilities which our customers can access on an integrated basis or sepretely as they prefer.
“Together, TechnipFMC can add more value across subsea, surface and onshore/offshore, enabling us to accelerate our growth.
“I am confident that we can quickly demonstrate the power of TechnipFMC to our clients, our people and our shareholders.”
Technip currently has 32,500 people and FMC Technologies employs a workforce of 16,500.
The pair will “quickly implement its new organizational plan following closing”.
Cost savings are expected to total $200million in 2018 and at least $400million in 2019, according to the firms.
They are expected to include “supply chain efficiencies, real estate, infrastructure optimization and other corporate and organizational efficiencies”. These are cost savings are in addition to the current cost cutting programmes the two firms are currently carrying out.
The pair currently operate in 45 countries.
Pilenko said one of the first port of calls would include examining the countries where both businesses have a presence and “rationalizing that footprint”.
The new company will have two headquarters located in Paris and Houston.
Doug Pferdehirt, currently FMC Technologies’ president, will serve as chief executive. The board will include seven members from each company. The group will be organized into five business units, covering surface, subsea services, products, subsea projects and onshore/offshore.
Houston will manage surface and subsea services. Paris will manage products, subsea projects and onshore/offshore.
Upon closing, Technip common stock will be converted into two ordinary shares of TechnipFMC. Each common FMC Technologies share will be exchanged for one TechnipFMC share.
Technip jumped 13 percent to 52.61 euros in Paris trading at 9:19 a.m. local time. The French company has lost a quarter of its value over the past year, while FMC has tumbled more than 30 percent in New York.
The deal is expected to close early next year.
Neil Gordon, chief executive of Subsea UK, said: “This is a significant global deal which will indeed create a market leader both in size and capability. Operators will benefit from an integrated offering that should reduce costs and drive efficiencies. However, technology and innovation must remain at the heart of and be allowed to flourish in what will now become a global giant.”
The merger follows Shell and BG’s multi-billion dollar tie-up.
Last month, Shell revealed it would be closing BG’s Aberdeen office as the two execute final merger steps. Read more here.