Oaktree’s plan to consolidate the offshore accommodation through the merger of Prosafe and Floatel has hit a potential stumbling block.
UK competition authorities have found that the proposed deal “raises competition concerns” in the supply of such vessels.
The UK’s Competition and Markets Authority (CMA) has been investigating the proposed deal since it was announced in early June 2019.
“After completing its initial Phase 1 investigation, the CMA is concerned that the deal could reduce competition in the supply of ASVs for oil and gas projects on the UK continental shelf,” it said in a statement.
The CMA’s investigation has found that Prosafe and Floatel are the two largest suppliers in the market, owning the vast majority of semi–submersible offshore accommodation in North West Europe.
“They compete closely with each other and have consistently won the most contracts over time. Aside from the merging businesses, there are limited alternatives available to customers at present,” the CMA said.
The CMA said it was is therefore concerned that because of the deal, Prosafe and Floatel’s customers would face “higher prices or lower quality offers when tendering for ASVs due to insufficient competition”.
If the merging businesses are unable to address the CMA’s concerns, the deal will be referred for an in-depth Phase 2 investigation, to be carried out by a group of independent CMA panel members.
A similar investigation into the proposed merger by the Norwegian Competition Authority has yet to report its findings.
Floatel, which has a fleet of five modern units, is a joint venture between Oaktree and Singapore yard group Keppel Corp.
If the proposed merger goes ahead the combined company’s largest shareholders will be Keppel with 22%, Oaktree Capital Management 19% and HitecVision 16%.