Singapore's EMS Energy, Koastal to Merge in $112.6M Deal
Singapore-listed EMS Energy Limited (EMS and together with its subsidiaries, the Group) announced Friday its plans to merge with Koastal Pte Ltd. and its subsidiaries (the Koastal Group), an Engineering, Procurement and Construction Management (EPCM) player, in a major share and cash transaction for $112.6 million (SGD 150.0 million).
EMS said it had entered into a non-binding Memorandum of Understanding (MOU) to acquire an investment holding company which will hold Koastal Group – if approved by the authorities and EMS shareholders – will transform the enlarged group into an integrated offshore and marine (O&M) services provider which can provide manufacturing and fabrication for larger and higher-value projects.
EMS, a provider of engineering O&M solutions, customized equipment and contract manufacturing, intends to satisfy the $112.6 million (SGD 150.0 million) via the issue of $94.3 million (SGD 125.7 million) worth of new EMS shares at $0.2589 (SGD 0.345) each and a cash payment of $18.3 million (SGD 24.3 million) to the vendors, namely Ting Teck Jin (Ting) and Ting Teck Seh. Koastal Group is valued at $143.1 million (approximately SGD 192.8 million) by an independent valuer, Jones Lang LaSalle Corporate Appraisal and Advisory Limited.
Ting, executive chairman and CEO of EMS, is EMS’s single largest shareholder.
Koastal Group is principally engaged in providing engineering, procurement and construction management (EPCM) services, as well as installation, commissioning and rig and marine equipment repair services to marine and offshore oil and gas (O&G) companies. It is also engaged in trading as a distributor and agent of products for the marine and offshore O&G companies.
EMS and Koastal Group have worked closely since 2010, leveraging on their different services and strengths to tender for and implement larger marine, O&G projects.
EMS has outlined a strategy to take on larger O&G projects and improve operational and internal efficiencies. It has also started work on a larger waterfront facility in Tuas, Singapore, expected to be completed in 2016. The proposed merger will allow EMS to scale up the value chain more aggressively, improve efficiencies, diversify its revenue streams and capture higher-margin, larger-scale projects.
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