Ashtead Technology’s boss has said a link-up with a rival rentals business is unlikely to end the firm’s hunt for mergers and acquisitions.
Forum Energy Technologies’ rentals wing is the second business Ashtead has joined forces with since it was bought by Arab Petroleum Investments Corp and Buckthorn in 2016, the other one being Abu Dhabi based TES.
Chief executive Allan Pirie said Ashtead was still actively looking to “build the business” through M&A opportunities in the UK and beyond.
He said Ashtead went in for Forum because of its scale, the strength and depth of its workforce and of its rental pool.
The link-up will create one of the sector’s biggest providers of subsea survey and remotely-operated vehicle equipment rental services.
Trading as Ashtead Technology, the business will be supported by 120 staff members across locations in Aberdeen, Singapore, Abu Dhabi, London and Houston.
It will have a rental fleet comprising 19,000 units worth more than £100million.
Mr Pirie said: “It made sense for us to come together as Ashtead pushes for scale. The market needs consolidation. We’ve seen mega mergers but the subsea service space is too fragmented to be able to service customers effectively.”
The deal was announced in December and completed last month. Mr Pirie said Forum employees affected by the deal had already switched over to Ashtead.
“We’re in good shape and because it has been a very smooth integration it means we can focus on the next stage of growth,” he said, adding that investment in the fleet would continue.
Mr Pirie also said Ashtead may need to review its accommodation arrangements if the company’s workforce keeps growing.
He said Subsea Expo was a perfect opportunity for Ashtead to meet customers and explain the thinking behind the deal.
Scale wasn’t the only motivating factor. Forum was stronger in ROV tooling than Ashtead, while the latter has greater service capability, according to Mr Pirie.
He said the deal represented a marriage of the best parts of both companies.
Ashtead will also launch its new brand at Subsea Expo. Mr Pirie said Ashtead needed a makeover.
“We felt Ashtead was seen as a rental business,” he said. “That’s reasonable in many ways, but in the last few years we’ve moved beyond that quite a lot to provide more value in terms of solutions you cannot get straight off the shelf, including the training of personnel and project management.”
Asked whether the subsea sector is in better shape than a year ago, Mr Pirie said: “There is an air of optimism, but that has not been reflected in work or day rates at this point in time.
“There is a hunger for technology to do things better and faster, but given the strength of balance sheets and what has happened during the downturn, there’s a funding gap in market for new technology.
“That’s where we can assist by investing through the downturn and we plan to invest more to support our customers.”