U.S. offshore vessel operator Tidewater is taking over Singapore’s Swire Pacific Offshore and creating “the world’s leading offshore support vessel operator.” Following the completion, Tidewater’s fleet will include a total of 203 vessels.

Tidewater revealed on Wednesday it has entered into a definitive agreement to acquire all of the outstanding shares of Swire Pacific Offshore (SPO), a subsidiary of Swire Pacific Limited for approximately $190 million.

According to Tidewater, the agreement will create the industry’s largest fleet of OSVs. SPO’s fleet of 50 OSVs consists of 29 AHTS vessels and 21 PSVs. Tidewater will own a fleet of 174 OSVs, bringing Tidewater’s total fleet size to 203 vessels, including crew boats, tug boats and maintenance vessels.

Specifically, the transaction adds 18 large PSVs and 10 large AHTSs to Tidewater’s fleet, with the age profile of large PSVs and large AHTSs improving by 0.6 years and 2.7 years, respectively.

Tidewater
Pro forma fleet composition and age profile; Source: Tidewater

Post-consummation of the transaction, Tidewater will target approximately $45 million of annual run-rate cost synergies it has identified.

Tidewater will retain what it claims is the strongest balance sheet in the industry, with approximately $110 million of cash on hand, full access to our existing undrawn $25 million revolving credit facility and financial flexibility under existing indentures.

The transaction was unanimously approved by Tidewater’s board of directors and is expected to close in the second quarter of 2022.

Expansion into Southeast Asia market

Another rationale for the transaction includes the fact that it enhances Tidewater’s presence in West Africa, provides for an expansion of its footprint in the rapidly growing Southeast Asia region, and is additive to its footprint in the Middle East.

Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, “The acquisition of Swire Pacific Offshore marks another important milestone in the strengthening of Tidewater’s leadership position as we capitalize on the recovery in the OSV industry.”

Kneen also added that the acquisition will allow the company to capitalise on the continued improvement in the offshore supply vessel market, providing it with significant additional earnings and free cash flow generation potential as utilization and day rates continue to improve as all 50 acquired vessels are currently active and working throughout the world.

Kneen further stated: “The acquired fleet is primarily split among West Africa and Southeast Asia and the Middle East. 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.”

It is worth reminding that Tidewater last January added a new member to its board of directors to assist in spearheading the company’s growth strategy as the offshore oil and gas market is recovering from the downturn.

In a separate statement on Wednesday, Swire Pacific confirmed the agreement, saying it is in line with its strategy of reducing exposure to non-core assets and recycling capital to focus on core businesses that have strong growth opportunities in Greater China and Southeast Asia – including property, beverages, aviation and more recently, investments in the healthcare sector.

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