Abu Dhabi seeks to create national engineering champion

It would have a footprint in markets within the MENA and in South Asia

  
Image used for illustrative purpose. Abu Dhabi skyline

Image used for illustrative purpose. Abu Dhabi skyline

Abu Dhabi Tourism & Culture/ Handout via Thomson Reuters Zawya

DUBAI: Abu Dhabi is seeking to create a national and regional oil and gas services champion through the combination of contracting firms the National Petroleum Construction Company (NPCC) and the National Marine Dredging Company (NMDC).

ADQ, a state-owned holding company, said on Sunday its subsidiary Senaat and other minority shareholders of NPCC had submitted an offer to the NMDC board that would create "an integrated oil and gas marine services company".

The proposed transaction "would create a new national and regional integrated engineering, procurement and construction (EPC) champion," ADQ said further in a statement.

It would have a footprint in markets within the MENA (Middle East, North Africa region) and in South Asia.

The statement did not give any further explanation of the rationale of the deal, which coincides with difficult times for the oil and gas sector. Demand for the resources has been particularly hard hit by the COVID-19 pandemic as lockdowns and travel restrictions have sapped consumption.

The transaction proposed is an asset transfer from NPCC to NMDC, ADQ said in a statement. In exchange, NPCC shareholders would receive from NMDC an instrument, which can be converted into 575,000,000 ordinary shares in the combined group once the deal is closed.

The strike price for the convertible instrument in NMDC is AED 4.40 per share, ADQ said, and implies an equity value AED 1.1 billion for NMDC.

The separate companies being combined had total revenue of 8.88 billion dirhams ($2.42 billion) last year, ADQ said.

Shares of NMDC, listed in Abu Dhabi, rose 14.4% after the announcement. NPCC is not listed. ($1 = 3.6728 UAE dirham)

(Reporting by Hadeel Al Sayegh; editing by Barbara Lewis) ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))

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