France based oil services firm Technip has signed $13bn merger deal with the US subsea equipment supplier FMC Technologies to improve its balance sheet amid a slump in oil prices.
The companies agreed to merge and create a combined company, called TechnipFMC, to drive change by redefining the production and transformation of oil and gas.
A Memorandum of Understanding (MOU) to this effect has been signed by the two firms, with plans to sign a definitive business combination agreement.
Under the terms of the deal, shareholders of the each company will own close to 50% of the combined entity.
FMC Technologies chairman and CEO John Gremp said: "This is a compelling combination that will create significant additional value for clients and all shareholders, by expanding the success that FMC Technologies and Technip have achieved through our alliance and joint venture, to capitalize on new opportunities and drive accelerated growth."
TechnipFMC will offer a new generation of comprehensive solutions in subsea, surface and onshore/offshore in order to reduce the cost of producing and transforming hydrocarbons.
Technip chairman and CEO Thierry Pilenko said: "We have complementary skills, technologies and capabilities which our customers can access on an integrated basis or separately as they prefer.
"Together, TechnipFMC can add more value across Subsea, Surface and Onshore/Offshore, enabling us to accelerate our growth."
The combined company expects to achieve $200m of pretax cost synergies in 2018 and at least $400m in 2019.
FMC Technologies COO and president Doug Pferdehirt said: "This transaction will allow us to deliver even greater benefits to our customers through a broadened portfolio that provides a unique set of integrated technologies and competencies that are underpinned by a history of developing rich partnerships and creating customer success."
TechnipFMC will categorize its activities into five business units which will cover surface, subsea services, products, subsea projects, and onshore/offshore, with the first two headquartered in Houston and the others in Paris.
Image: The new combined entity will offer solutions in subsea, surface and onshore/offshore to reduce hydrocarbons production costs. Photo: courtesy of think4photop/ FreeDigitalPhotos.net.