Houston-headquartered OSV owner Tidewater has entered into a definitive agreement to acquire all of the outstanding shares of Singapore offshore vessel operator Swire Pacific Offshore (SPO), a subsidiary of Swire Pacific Limited, for approximately $190m.
Tidewater said the move will create the industry’s largest fleet of 174 offshore support vessels. SPO’s fleet of 29 AHTS vessels and 21 PSVs, estimated by VesselsValue to be worth around $441m, will take Tidewater’s total fleet size to 203 vessels, including crew boats, tug boats and maintenance vessels.
The acquisition is expected to significantly enhance Tidewater’s presence in West Africa, and provide for an expansion of its footprint in the rapidly growing Southeast Asia region and is additive to its footprint in the Middle East. Tidewater added it has identified approximately $45m of annual run-rate cost synergies that will be targeted within 24 months from the close of the transaction.
Quintin Kneen, Tidewater’s president and CEO, commented: “I believe that the timing of this acquisition will allow Tidewater to capitalise on the continued improvement in the offshore supply vessel market, providing Tidewater with significant additional earnings and free cash flow generation potential as utilisation and day rates continue to improve. All 50 acquired vessels are currently active and working throughout the world, allowing Tidewater to immediately leverage this new asset base.
“The addition of 25 OSVs in West Africa will nearly double Tidewater’s presence in the rapidly growing region, positioning it as the largest operator of active vessels in the region. Similarly, the addition of the SPO fleet in Southeast Asia and the Middle East positions Tidewater as the largest operator of active vessels across the entire region. The expansion of the Southeast Asia region, with 19 vessels currently operating, provides us with an opportunity to meaningfully participate in the oil & gas vessel market in the near-term and provides a platform with which to pursue offshore wind development expected to advance in the region.”
Under the terms of the transaction, Tidewater will issue 8.1m Jones Act warrants, each of which will be initially exercisable for one share of Tidewater common stock at $0.001 per share, plus a cash payment of $42m. The warrants to be issued in the transaction would represent, upon exercise, around 15.6% of all of Tidewater’s outstanding shares of common stock and existing warrants. The Jones Act warrants to be issued in the Transaction are non-voting, are not entitled to receive any dividends or other distributions. The deal is expected to close in the second quarter of 2022.