Malaysian UMW Oil and Gas’ acquisition of compatriots Icon Offshore and Orkim has fallen through.
This was first reported on Thursday by Malaysia’s The Edge Markets which cited unnamed sources, only to be confirmed later by UMW itself in a Bursa Malaysia filing.
UMW Oil & Gas in January announced it would buy Icon Offshore, a Malaysian offshore vessel owner, from HOSB, a subsidiary of Ekuinas Capita.
Separately, UMW said it would buy Orkim, an operator of clean petroleum product transportation vessels, held by TKSB also held by Ekuinas, for a cash consideration of $106.2 million.
The now terminated combination would have create a major integrated offshore service provider across the oil and gas chain, comprising of seven jack-up rigs, one semi-submersible rig, 37 OSVs, 14 clean petroleum product vessels and two liquefied petroleum gas marine transportation vessels.
The transactions were subject to various conditions including a due diligence conducted by all the parties involved. UMW in April agreed with HOSB and TKSB to extend the period available to conduct due diligence to May 19.
Both UMW Oil & Gas and Icon Offshore had their shares suspended for trading on Thursday, pending the release of a material announcement by UMW Oil & Gas.
Termination letter
In the announcement released on Thursday, UMW said it had received a letter from HOSB and TKSB proposing to terminate the sales and purchase agreements for Icon Offshore and Orkim.
“After due consideration, the Board has agreed to the request made by HOSB and TKSB to accept the Termination Letter,” UMW Oil & Gas said.
UMW Oil & Gas said agreed to terminate the transaction after considering the significant capital requirements of UMW-OG and upon taking into account the need to have greater clarity on the industry consolidation framework and certainty of the industry environment before any such consolidation can be pursued.
“The company may, however, continue to explore opportunities to collaborate in the future once there is more certainty in the industry environment and consolidation framework as the Board continues to believe that the creation of a major integrated O&G service provider is the right strategic approach for the longer term,” UMW Oil & Gas said.
Offshore Energy Today Staff