Industrial M&A February 2018


OIL & GAS COMPANIES
On February 1, Thai state-owned oil and gas production company PTTEP reached a deal with international major oil company Shell to acquire its assets in the Gulf of Thailand Bongkot field for $750 Million. Once the transaction is completed, PTTEP will hold 67% interest in the field, with Total owning the rest. Shell had earlier reached a deal to sell its interest in the field to Kuwait Foreign Petroleum Exploration Company for $900 million, but the acquisition was cancelled in October.
In a deal worth up to $175 Million, Norwegian independent company Aker Energy, a newly formed joint venture between Aker ASA and TRG, agreed to acquire Hess’s interest in the Cape Three Points Block in the Tano Basin offshore Ghana. Hess held a 50% interest in the block, which has estimated reserves of 550 million barrels, and Aker Energy aims to finish development and start production in 2021.
On February 23, Spanish Oil&Gas producer Repsol sold its 20% stake in natural gas and electricity utilities company Gas Natural SDG to CVC Capital Partners, a private equity firm. The deal, worth €3.8 Billion, is part of the firm’s effort to reduce its debt by selling non-strategic assets until 2020.
In other news, Neptune Energy completed its €4.7 Billion acquisition of Engie E&P International from French energy group Engie. Talks regarding the deal had started in May 2017 and its completion sees Neptune Energy become an international independent E&P company across the North Sea, North Africa and South East Asia, with a production of 154,000 Bpd.
This month, CEO of UAE state company ADNOC participated in several meetings during his visit to Beijing aimed at expanding partnerships with Chinese energy, technology and chemical companies. In talks with representatives of CNPC, Wanhua Chemical Group, Sinochem and China Investment Corporation, potential for new partnerships and co-investment opportunities as part of ADNOC’s 2030 growth strategy were discussed.
In Italy, natural gas infrastructure company Snam acquired and 82% stake in TEP Energy Solution for €21 Million. As one of the main Italian firms in the energy efficiency sector, TEP will help Snam fulfill its aim for 2030 of becoming a leader in the promotion of a more efficient and sustainable energy system.

EPC CONTRACTORS
TechnipFMC was particularly active in February. The UK-based firm completed the acquisition of Plexus Holdings’ Jack-up business for £42.5 Million. The deal will help TechnipFMC extend and strengthen its position in exploration-drilling products and services and HPHT operations. TechnipFMC also acquired a 51% stake in Island Offshore’s subsea subsidiary Island Offshore Subsea, which offers Riserless Light Well Intervention (RLWI) project management and engineering services for plug and abandonment (P&A), riserless coiled tubing and well completion operations. The two companies also entered into a strategic cooperation agreement to deliver RLWI services on a worldwide basis.
In other news, multinational giant Schlumberger and Norwegian specialist Subsea 7 entered negotiations to form a joint venture building on the Subsea Integration Alliance established in 2015 between Subsea 7 and Schlumberger subsidiary OneSubsea. The proposed joint venture will further strengthen the FEED and execution of integrated projects and will build on the expertise from both companies creating a unique Life of Field offering that includes autonomous subsea technology, digitally enabled remote surveillance and production monitoring, and inspection, maintenance and repair services.

TECHNOLOGY LICENSORS
In the technology sector, Honeywell UOP launched a new high recovery retrofit unit to upgrade existing cryogenic units to extract more than 99% of high-value ethane from natural gas. The technology will help gas producers prepare for the predicted surge in ethane demand resulting from new ethane crackers in the U.S. The American conglomerate also signed a Memorandum of Understading (MoU) with Equate Petrochemical Company to jointly develop new technologies to reduce downtime and increase the profitability of petrochemical production plants. The new technology will support production at Equate’s petrochemical complexes in Kuwait, North America and Europe.
Danish firm Haldor Topsoe signed a shareholder agreement with Jiangsu Industrial Technology Research Institute and Xiangcheng Suzhou District for a joint R&D company in the Jiangsu Province of China. The company will focus on the fast commercialization of new technologies and services, with special attention to the needs of customers in China.
German giant Linde signed a cooperation agreement with Univation Technologies to add value to the customer by reducing polyethylene project complexity, increasing efficiency, and reducing costs. Univation has the world’s leading polyethylene technology, the UNIPOL process, and thus this alliance will help Linde improve its product offering.

CHEMICALS
In the petrochemical industry, LyondellBasell announced a deal to acquire A. Schulman, a leading global supplier of high-performance plastic compounds, composites and powders, for $2.25 Billion. The acquisition, expected to close in the second half of 2018, will have to receive approval from regulators and A. Schulman shareholders.
In the U.S., international major Total and petrochemical specialists Borealis and Nova Chemicals announced that their affiliates have signed definitive agreements to form a joint venture in petrochemicals on the U.S. Gulf Coast. The joint venture will be owned for 50% by Total and 50% by Novealis, a Borealis and Nova Chemicals joint venture, and it will include: the 1 MTPA ethane cracker being built at Port Arthur, Texas; Total’s existing 400,000 TPA polyethylene plant at Bayport, Texas; and a new 625,000 TPA polyethylene unit at Total’s Bayport complex following a decision on an acceptable EPC contract.

RENEWABLES
In the renewables sector, renewable infrastructure investment firm Greencoat Capital acquired a 142MW portfolio of U.K. solar assets from developer Canadian Solar. The deal comprises 24 sites developed by the Canadian company and has increased Greencoat’s solar generation capacity to 470 MW across more than 60 U.K. sites.

STEEL & METALS
In the metallurgical sector, a proposed ThyssenKrupp and Tata Steel joint venture moved forward, receiving the approval of the German conglomerate’s unions. The joint venture would combine the European activities of the two companies and thus have estimated sales of €15 Billion and 48,000 employees. Following regulatory approval, the closing of the agreement should take place at the end of 2018.
Tata Steel also announced plans to invest £14 Million in its hot strip mill at Port Talbot, in South Wales. As part of the investment, a transfer bar cooling system has been installed, leading to an increase in capacity of 150,000 TPA.
In the Middle East, Industries Qatar (IQ) announced the signing of an off-take agreement between Muntajat and Qatar Steel to migrate the marketing, sales and distribution activities of Qatar Steel’s entire production to Muntajat. The migration is scheduled to be completed by the beginning of the second half of 2018 and will allow Qatar Steel’s products to reach a wider customer base internationally thanks to Muntajat’s knowledge and accumulated know-how in global marketing.

COMPONENTS MANUFACTURERS
In the components sector, General Cable‘s shareholders approved the $3 Billion acquisition by Prysmian Group. The deal, first announced in December 2017 after much speculation, will create a company with a presence in more than 50 countries and 31,000 employees. Subject to regulatory approvals, the acquisition should be completed in the third quarter of this year.
On February 21, Curtiss-Wright reached an agreement to acquire Dresser-Rand, a Siemens Government Technologiesbusiness unit that designs and produces steam turbines, reciprocating compressors, engine guard valves and other rotating equipment for the Navy’s shipbuilding programs and for the nuclear power sector, for $212.5 Million. Dresser-Rand will become part of Curtiss-Wright’s power segment and, subject to regulatory approvals, the acquisition should be completed in April.
Sulzer Chemtech, a market leader for separation and mixing technology, and SGL Group, a leading manufacturer of carbon made products, are expanding their cooperation in the field of column internals based on SGL’s carbon fibre composite materials (CFC) going by the brand name Sigrabond. In addition to the CFC structured packing that has already been marketed under the Sulzer brand name MellaCarbon, the existing CFC column internals portfolio now includes liquid distributors, collectors and feed pipes made of Sigrabond.
On February 7, Xylem completed the acquisition of Pure Technologies, a Canadian smart infrastructure assessment and management company. Pure Technologies’ diagnostic and analytics solutions and services address key water and wastewater infrastructure challenges and are highly complementary to the rest of Xylem’s portfolio.
Bitzer, a large independent manufacturer of refrigeration compressors, acquired ElectraTherm, a supplier of small scale ORC power generation. ElectraTherm’s Power+Generator uses ORC technology to capture waste heat and convert it to clean electricity and can utilize waste heat on applications such as internal combustion engines, biomass boilers, flare gas, geothermal/co-produced fluids, and more.
On a less positive note, three Italian companies started bankruptcy proceedings: Belelli Engineering, an independent engineering company primarily focused on designing and supplying process plants and equipment for the oil and gas industry; Parcol, a supplier of control valves, steam desuperheating systems and safety valves; and Sices Group, a specialist in design, supply, erection and maintenance of pressure vessels, heat exchangers, skid mounted plants, boilers and complete plants for the Oil and Gas, Petrochemical, Energy and Power, Environmental and Nuclear sectors.

LOGISTICS
In the logistics industry, Schulte Group received approval by German regulators for its acquisition of LNG ship manager Pronav. The deal will allow Schulte to exploit the ship owning and ship management potential in the growing LNG market.
On February 8, rumours emerged regarding a possible $1.5 Billion IPO for Ceva Logistics. According to sources in Apollo Global Management, the private equity firm that controls Ceva, the operation could take place in April.
The deal between Italian shipbuilder Fincantieri and the French Government for the acquisition of the STX Saint-Nazaire shipyards was finally signed. The Italian company will own 50% of the yards with an additional 1% on loan from the French Government’s 34%. French Defense company Naval Group will have 10% and the rest will be divided between STXemployees and local firms. The acquisition will cost Fincantieri €59.7 Million. Together with this deal, there were also discussions between Orizzonte Sistemi Navali, a joint venture of Fincantieri and Italian industrial conglomerate Leonardo, and French firms Naval Group and Thales for a future partnership in the military shipbuilding industry. The Franco-Italian alliance would be better positioned to compete for contracts from institutions such as the U.S. Navy.

DIGITAL AND ENGINEERING SOFTWARE
In other technology news in Asia, German giant Linde launched its Asia Pacific Digitalisation Hub in Singapore, a strategic initiative to rapidly identify, develop and trial emergent digital technologies for industrial applications in the region and beyond. Partnering with the Singapore Economic Development Board, Linde will invest over $20 Million in order to expand the company’s capabilities in the digital transformation of the gases and engineering industries, improving safety and process efficiency, and delivering better value.
On February 12, AVEVA Group’s merger with Schneider Electric was approved by US regulators. The deal, worth over $4 Billion, was agreed in September 2017 and was the third attempt at combining the two companies. AVEVA also acquired the intellectual property rights to the engineering design database and design productivity software known as EDD and PDMSi, developed by Shell International Exploration and Production. The company will add the new technologies to its standard software portfolio to be made available to every plant operator and the EPC companies that serve them.
On February 22, American companies Emerson and AspenTech formed an alliance to deliver asset optimization software solutions along with global automation technologies and operational consulting services. The alliance will initially focus on three key areas: engineering software, manufacturing and supply chain software and asset performance management software to improve plant reliability.
On February 12, Metalloinvest, a leading global iron ore and merchant HBI producer and supplier, and one of the regional producers of high-quality steel, completed the construction of a data centre in Stary Oskol, Russia. The data centre provides stable engineering infrastructure for Metalloinvest’s IT systems, boosts the efficiency with which the company can gather, store and process data, and ensures the company’s cyber security.

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