SembMarine shares surge as buyout talks gain steam

SCI might privatise the struggling company.

Sembcorp Marine enjoyed brisk trading and steep share price surge early Wednesday, after reports that its parent company Sembcorp Industries is mulling a privatisation deal.

As of 11:28 AM, Sembcorp Marine was one of the most heavily traded counters on the Singapore Exchange. Some 10.7 million shares have changed hands, causing the rig builder to gain 4% to $1.54 per share.

In contrast, its parent company Sembcorp Industries has fallen 6.69% to $2.37 per share. 

A report by Reuters citing people familiar with the deal said that SCI is considering taking full control of its subsidiary to replenish finances strained by a collapse in oil prices.

Analysts at Maybank Kim Eng note that a privatisation deal makes sense because if conditions deteriorate further, SMM may require additional funding to sustain its operations.

“A Temasek-led privatisation will also relieve SCI of the additional strain that it may have to carry if it were to undertake the privatisation,” Maybank Kim Eng said.