Subsea 7 deal creates industry leader

Norwegian marine engineering firm Acergy - a major presence in Aberdeen - has bought rival Subsea 7 in a share deal worth £1.6 billion.

Creating a combined workforce of 12,000, the deal will produce a UK-based industry leader in undersea engineering and construction jobs for the oil and gas sector.

The move comes amid a gradual rally in the demand for offshore oil services because of higher and more stable energy prices.

The companies said they expected annual synergies of at least £66.7 million after the deal, while they had an order backlog of £3.5 billion.

Norwegian firm Acergy will take 54% of the new entity and Subsea 7 will hold the remaining 46%.

Subsea 7 – which also has its UK headquarters in Aberdeen and has further bases in Wick and Leith – was founded by Norwegian investor Kristian Siem, who is to become chairman of the combined entity.

Jean Cahuzac, the present Acergy Chief Executive, will become Chief Executive of the combined group – to be named Subsea 7.

In a joint statement the companies said: “Both boards believe that the combined entity will be better able to meet the growing size and technical complexity of subsea projects, driven by the demand to access ever more remote reserves in increasingly harsh environments.”

Acergy’s strength is in West Africa and Asia, where Subsea 7 has only a limited presence, while Subsea 7 has the advantage in the North Sea and Brazil.

Arctic Securities analyst Erik Toenn said the deal would transform the combined group into “the world's leading subsea player”.

He said: “This makes much sense in every possible way.”

Copyright © Press Association 2010