Tidewater has set out an agreement to buy Swire Pacific Offshore for $190 million, creating the world’s largest offshore support vessel (OSV) fleet.
The company also bought out its local partner in an Angolan joint venture in the first quarter.
Swire has a fleet of 50 OSVs, including 29 anchor Handling Tug Supply (AHTS) vessels and 21 platform support vessels (PSVs). Combined with Tidewater’s existing vessels, this will take the company’s total to 174 OSVs, with 203 vessels in total, including crew boats and tug boats.
Tidewater will issue warrants, exercisable for its shares, plus a cash payment of $42mn. The warrants equate to a 15.6% stake in Tidewater. The deal does not need shareholder approval and Tidewater’s board has approved it.
The company expects the sale to close in the second quarter of the year.
Tidewater’s president and CEO Quintin Kneen said the deal was “another important milestone”. The purchase will see Tidewater “capitalise on the recovery in the OSV industry. I am excited to have acquired a high-quality fleet with a strong reputation in the maritime sector globally.”
The deal gives Tidewater an opportunity to secure “significant additional earnings and free cash flow generation potential as utilisation and day rates continue to improve. All 50 acquired vessels are currently active and working throughout the world, allowing Tidewater to immediately leverage this new asset base.”
The buyer expects $45mn of cost savings as a result of the deal, within 24 months of it closing. This will come from $20mn in G&A savings and $25mn in operational expenditure savings.
The deal will grow Tidewater in West Africa, while expanding in Southeast Asia and the Middle East.
Swire has 25 vessels in West Africa and 23 in the Middle East and Asia Pacific. The last two are in Europe and the Americas.
Assuming completion of the deal, Tidewater will overtake Edison Chouest and Bourbon Offshore in terms of OSV fleet size.
“The addition of 25 OSVs in West Africa will nearly double Tidewater’s presence in the rapidly growing region, positioning it as the largest operator of active vessels in the region. Similarly, the addition of the SPO fleet in Southeast Asia and the Middle East positions Tidewater as the largest operator of active vessels across the entire region,” Kneen said.
Tidewater bought out Sonangol’s stake in the Sonatide joint venture in the first quarter of this year.
Kneen said the deals would position Tidewater as “the world’s leading OSV operator”. The company has “the cleanest balance sheet in the industry”.
Tidewater had struggled with securing payment in Angola. While the amounts were denominated in US dollars, payments to Sonatide were part paid in the local kwanzas.
Sonangol set out plans to sell its 51% stake in Sonatide in 2019, under the Propriv programme.
Kneen said the vessel operating margin in West Africa had increased in the first quarter to 31.6%. Buying the 51% stake in Sonatide will “allow us to consolidate this business going forward and enable us to grow our West Africa operations from Angola as the recovery there continues to unfold”, Kneen said.
All Tidewater’s areas increased revenue in the first quarter, with West Africa up 14.5% and the Americas up 13.5%.