UK: Management Strategy Technip FMC Splits into 2 Independent Companies
Technip FMC’s Board of Directors has announced that the company will be split into 2 industry-leading and publicly traded companies – Remain Co and Spin Co. With this move, both the firms will be able to focus on their strategies and grow in their respective business.
Houston/USA – Technip FMC has recently announced that its Board of Directors has unanimously approved its plan to separate into two industry-leading, independent, publicly traded companies: Remain Co, a fully-integrated technology and services provider, continuing to drive energy development; and Spin Co, a leading engineering and construction (E&C) player, poised to capitalise on the global energy transition. The separation would enhance both Remain Co’s and Spin Co’s focus on their respective strategies and provide improved flexibility and growth opportunities.
The transaction is expected to be structured as a spin-off of Technip FMC’s Onshore/Offshore segment to be headquartered in Paris, France. The separation is expected to be completed in the first half of 2020, subject to customary conditions, consultations and regulatory approvals, at which time all outstanding shares of Spin Co will be distributed to existing Technip FMC shareholders.
The 2017 merger of Technip and FMC Technologies created a new subsea leader and established Technip FMC as the only fully-integrated subsea provider. Technip FMC has redefined subsea economics through its integrated model and accelerated technology development and innovation. At the same time, the Company’s Onshore/Offshore business has consistently demonstrated operational excellence, successfully delivered landmark projects, built an unprecedented backlog, and positioned itself to continue capitalising on growing demand for liquefied natural gas (LNG). The exceptional performance of Technip FMC since the merger has made the proposed spin-off possible and, when completed, will enable the two companies to unlock additional value.
The two companies would have:
• Distinct and expanding market opportunities and specific customer bases
• Enhanced focus of management, resources and capital
• Robust backlogs supporting future revenue growth
• Strong balance sheets and capital structures tailored to individual business needs
• Compelling and distinct investment profiles
Doug Pferdehirt, Chairman and CEO of Technip FMC, stated, “Since the creation of Technip FMC, we have pioneered the integrated business model for subsea and transformed our clients’ project economics. To further enhance value creation, our Board of Directors and management team have continuously evaluated strategic options and, after a comprehensive review, determined that it is in the best interest of Technip FMC and all of our stakeholders to create two diversified pure-play leaders. We are confident that the separation would allow both businesses to thrive independently within their sectors, enabling each to unlock significant additional value.”
With approximately 15,000 employees, Spin Co would be one of the largest E&C pure-plays and is poised to capitalise on the global energy transition. The company will be uniquely positioned to capture LNG opportunities as a result of its robust project delivery model, demonstrated capabilities and proven track record. In addition, the new firm will benefit from its leadership position in the downstream market, as well as future growth opportunities in biofuels, green chemistry and other energy alternatives.
The company would comprise the Onshore/Offshore segment, including Genesis – a leader in front end engineering and design. Spin Co would also include Loading Systems, a leader in cryogenic material transfer products, and Cybernetix, a technology leader in process automation, that have historically been a part of the Surface Technologies and Subsea businesses, respectively.
Spin Co will be led by an experienced, proven management team. Catherine Mac Gregor, who currently serves as Technip FMC’s President, New Ventures, will serve as Chief Executive Officer of Spin Co. Bruno Vibert will serve as Chief Financial Officer, and Marco Villa will serve as Chief Operating Officer. The company will be incorporated in the Netherlands with its headquarters in Paris and listed on the Euronext Paris exchange. Bpifrance, a key shareholder of Technip FMC, strongly supports the proposed transaction and recognises Spin Co as a global leader with the potential for high value creation.
With approximately 22,000 employees, Remain Co would be a fully-integrated technology and services provider, continuing to drive energy development. The company’s role will be to support clients in the delivery of unique, integrated production solutions. As Technip FMC has transformed the industry through its pioneering, integrated model in Subsea, Remain Co will apply the same winning formula to Surface Technologies.
As a standalone company, Remain Co will be the largest diversified pure-play in the industry. Doug Pferdehirt, Chairman and Chief Executive Officer of Technip FMC, and Maryann Mannen, Executive Vice President and Chief Financial Officer of Technip FMC, will continue to serve in their roles following the separation. Remain Co will remain incorporated in the United Kingdom with headquarters in Houston and listed on both the NYSE and Euronext Paris exchange.
Upon closing, Remain Co and Spin Co will have tailored capital structures and financial policies appropriate for each company’s business, and both companies are expected to have investment grade credit metrics. Both companies will be committed to disciplined capital allocation and prudent return of capital to shareholders. Both companies will have compelling and unique financial profiles well suited to their respective businesses.
The successful completion of the planned spin-off is subject to general market conditions, regulatory approvals and consultation of employee representatives, where applicable, and final Board approval. While awaiting receipt of all final approvals, the company and its employees will remain focused on delivering operational excellence and world-class service to its clients. The transaction is expected to be tax free to certain shareholders where permissible, including the United States.