Singapore-listed EMS Energy Ltd. plans to merge with Koastal Pte Ltd. and its subsidiaries (the Koastal Group), an engineering, procurement, and construction management (EPCM) company, in a 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 that will hold Koastal Group – if approved by the authorities and EMS shareholders – and will transform the enlarged group into an integrated offshore and marine (O&M) services provider that can provide manufacturing and fabrication for larger and higher-value projects.
EMS, a provider of engineering O&M solutions, customized equipment, and contract manufacturing, will 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 Ltd. Ting, executive chairman and CEO of EMS, is the single largest shareholder of EMS.
Koastal Group is principally engaged in providing EPCM services, along with 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 to improve operational and internal efficiencies. It has also started work on a larger waterfront facility in Tuas, Singapore, which is expected to be completed in 2016.
Prior to the completion of the proposed transaction, Koastal Group will undergo a restructuring exercise that will include the disposal of its equity interest in EMS, NVS Holdings Pte. Ltd., NVS (Singapore) Pte. Ltd., and Nosco-Vinalines Ship Repair Co.
The acquisition is subject to approval by the Singapore Exchange and EMS shareholders at an extraordinary general meeting to be convened.