Malaysia's Kencana Petroleum said Thursday it is on track to merge with SapuraCrest Petroleum to create the world's fifth-largest oil and gas service provider in an 11.85 billion ringgit ($3.7 billion) deal after obtaining shareholder approval.
The merger should be completed by February with the new entity being listed in March, pending regulatory approvals, Kencana said in a statement.
Under the deal, a special purpose vehicle called Integral Key will buy all the assets and liabilities of SapuraCrest for 5.87 billion ringgit ($1.84 billion) and Kencana for 5.98 billion ringgit ($1.87 billion).
Kencana Chief Executive Mokhzani Mahathir said shareholders in the two companies would receive a total cash payout of 1.84 billion ringgit ($576 million) as well as Integral shares. Upon completion of the deal, SapuraCrest's shareholders will hold 49.94 percent of Integral, with the rest owned by Kencana shareholders.
He said the merger would create an entity that is competitive in the international arena, with a workforce of 9,000 staff in more than 20 countries.
SapuraCrest Vice Chairman Shahril Shamsuddin was quoted as saying in The Star newspaper that Integral would be renamed Sapura Kencana Petroleum Berhad following its listing.
He said the merged entity would have contracts in hand totaling 13 billion ringgit ($4.1 billion) of which half would be from overseas _ mainly Brazil, Australia, India and the Middle East.