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Temasek Offers to Buy Controlling Stake in Keppel

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The Keppel FELS shipyard in a busier era (file image)

By The Maritime Executive 10-21-2019 06:46:18

Singaporean state investment company Temasek announced Monday that it is making a bid for an additional 30.5 percent share of offshore shipbuilder and real estate investment firm Keppel. If completed, the deal would bring Temasek's share to 51 percent, giving it a controlling interest. 

Temasek is offering a premium of about 26 percent over the last traded price of Keppel's stock. Keppel asked the Singapore Exchange to temporarily suspend trading in its shares while the parties discuss the deal. 

Temasek does not intend to take Keppel private, and the company will continue to trade on the Singapore Exchange. However, Temasek does intend to work with the company's board on a "comprehensive strategic review of its business." This process may include new Temasek-nominated directors for Keppel's board; a refresh may have already begun, as Keppel expanded its board with the addition of three new independent directors last week. 

According to Temasek, the review could result in "joint ventures, strategic partnerships, acquisitions, disposals, mergers, or other transactions," leaving open the possibility of industry consolidation. Market speculation has turned to the possibility of a tie-up with domestic competitor Sembcorp, which faces the same cyclical challenges as Keppel's offshore shipbuilding enterprise. Sembcorp's stock increased by more than 10 percent on the news of Temasek's proposal. 

Keppel eyes autonomous vessels

Keppel is also looking at new business lines outside of its core offshore segment, like offshore wind infrastructure and autonomous ship technology. Swiss technology giant ABB announced Monday that it is working with Keppel's research unit, Keppel Marine and Deepwater Technology, to deploy autonomous navigation technology in Singapore. The joint team aims to refit a 100-foot harbor tug with an autonomy system and put it in service by the end of 2020. Once complete, it will likely be South Asia's first autonomous tug. 

The tug will be operated by Keppel's towing JV, Keppel Smit Towage, and it will go through a series of tests within the port of Singapore before entering service. ABB says that the location brings new and interesting challenges: its previous autonomous system tests were carried out in Helsinki, and Singapore's bustling harbor has "exponentially denser" traffic patterns. 

“The intent of our technology is not to entirely remove the crew, but rather to relieve the crew from the tasks than can be automated and thus enable them to perform at their best during critical operations," said Juha Koskela, managing director, ABB Marine & Ports.