Shipping investor Oaktree’s plan to consolidate the offshore accommodation sector through the merger of Prosafe and Floatel International has failed.
The combination of the two Oslo-listed companies has been called off by both sides, they said on Thursday.
"The regrettable conclusion is that any near-term completion of a value-enhancing merger is unlikely," the companies added.
The deal hit a stumbling block last year when UK competition authorities found it raised competition concerns in the supply of floatels.
Dominant market position
The UK’s Competition and Markets Authority (CMA) had been investigating the merger 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 September.
The CMA said 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 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”.
The deal was also being looked at in Norway.
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 had gone ahead the combined company’s largest shareholders would have been Keppel with 22%, Oaktree Capital Management on 19% and HitecVision with 16%.
