The proposed merger of NMDC and NPCC is expected to create a major integrated oil and gas and marine services contractor in the Middle East and North Africa

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NPCC shareholders issue merger offer to NMDC. (Credit: aymane jdidi from Pixabay)

National Marine Dredging Company (NMDC), a UAE-based marine engineer, said that it has received an offer to be merged with the National Petroleum Construction Company (NPCC), a construction engineering company.

The offer has been made by General Holding Corporation (Senaat), which is a part of the Abu Dhabi government-owned ADQ, and other shareholders, which hold a minority stake in NPCC.

The offer gives an implied equity value of AED1.1bn ($299.5m) to NMDC.

NMDC is engaged in providing dredging, land reclamation, and marine civil construction services. The company operates in the Middle East region, serving industries such as energy, environment, and seaborne trade and tourism

On the other hand, NPCC is an engineering, procurement, and construction firm that offers complete EPC solutions to offshore and onshore oil and gas sector.

NMDC and NPCC merger to create a major oil and gas and marine services contractor

According to ADQ, the proposed merger of the two firms is expected to create a major integrated oil and gas and marine services contractor in the Middle East and North Africa, catering to the regional and also South Asian markets.

ADQ chief investment officer Khalifa Al Suwaidi said: “As one of the largest pan-regional EPC [engineering, procurement and construction] players, this transaction will create a larger, more diversified and financially flexible national champion.”

The proposal calls for NMDC to issue a convertible instrument to Senaat and other minority shareholders of NPCC, which will be convertible into 575,000,000 ordinary shares in the merged entity after the closing of the deal. This represents 69.7% of the issued share capital of the combined entity after conversion.

The price at which the convertible instrument will convert into NMDC shares is AED4.4 ($1.2) per share.

Should a deal take place, then it will be subject to shareholders’ approvals and receipt of the standard regulatory approvals, and is expected to be closed by the end of this year.

NMDC’s board will look into the deal proposed by the NPCC shareholders before coming up with any recommendation to the company’s shareholders.