By JESSIE HORTON
STEPHENVILLE (May 24, 2016) – With numerous recent layoffs at the Stephenville location, many have wondered about the future of FMC Technologies. Now, officials have announced a merger with Technip SA, a Paris-based oil-services company with an est. market value of $13 billion, to form TechnipFMC.
Officials from FMC in Stephenville were not available Tuesday, but Lisa Adams, Public Relations Officer for FMC, said everything at the Stephenville FMC location will be “business as usual until the merger is closed, which is expected to occur in early 2017.”
Adams said what will happen following the closing of the merger is not yet confirmed for any of either companies’ locations. Lisa Albiston, Director of Corporate Communications at FMC, said, “Many details still need to be finalized. We hope to share more information on specific locations or facilities at a later date as we manage through our integration.”
By combining the two companies, officials say they hope to cut costs by $400 million a year beginning in 2019. While there is some concern about clearance for the combination, officials for both companies said they did not expect any regulatory obstacles. And analysts agreed, saying it was unlikely there would be any regulatory hurdles because the merger involved one company (Technip) merging with a supplier (FMC).
The merger comes just as these two, and other oil-services companies, are facing a drop-off in crude prices – they’ve fallen more than 60 percent in the past two years. As prices began to fall, FMC employees faced numerous layoffs.
FMC has faced a drop off in demand for their products as production companies have pulled back on projects and orders fell from $969 million to $672 million, according to information from the Wall Street Journal. That drop off led to layoffs and cutbacks across several FMC facilities, including Stephenville.
“Today we live in very challenging oil and gas market,” John Gremp, Chairman and Chief Executive Officer of FMC Technologies, told the WSJ. “We know that even when oil prices improve offshore production won’t be fully developed unless the industry improves project economics.”
According to a press release sent out on May 19 announcing the merger, the companies have entered into a Memorandum of Understanding (MOU) and expect to execute a definitive business combination agreement to combine the companies in an all-stock merger transaction.
“The transaction brings together two market leaders and their talented employees, building on the proven success of their existing alliance and joint venture, Forsys Subsea, uniting innovative technologies, common cultures and values, enabling rapid integration. The combined company will offer a new generation of comprehensive solutions in Subsea, Surface and Onshore/Offshore to reduce the cost of producing and transforming hydrocarbons. TechnipFMC’s flexible commercial model will provide both integrated and discrete solutions to customers across the value chain. With more than 49,000 employees operating in over 45 countries, TechnipFMC generated 2015 combined revenue of approximately $20 billion and combined 2015 EBITDA of approximately $2.4 billion. As of March 31, 2016, the two companies together had consolidated backlog of approximately $20 billion,” the release says.
“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,” Gremp said.
Technip Chairman and CEO Thierry Pilenko is set to become the new company’s executive chairman, with FMC President and COO Doug Pferdehirt to become CEO of the merged company.