FTI TechnipFMC Limited

PARIS—FMC Technologies Inc. and French oil-services rival Technip SA Thursday said they would merge in a $13 billion deal, a sign of accelerating consolidation in the sector hit hard by spending cutbacks by large oil groups amid the recent slump in crude prices.

The two companies have signed an agreement to merge in an all-stock transaction, FMC and Technip said in a joint statement. The merged company will be named TechnipFMC. "Each company's shareholders will own close to 50% of the combined company," the companies said.

The merger will allow the companies to cut costs by $400 million annually from 2019 on, they said.

The companies had combined earnings before interest, taxes, depreciation and amortization of $2.4 billion on revenue of $20 billion last year, with an order backlog of $20 billion, they said.

Consolidation in the oil-services business is a response to the collapse in oil prices in the past two years, a rout that has squeezed margins at oil-industry suppliers sometimes even more severely that oil companies as major oil firms often have other sources of profit, such as refining or producing petrochemicals, to partly offset plunging revenue from oil production.

"This is a compelling combination that will create significant additional value for clients and all shareholders," said FMC Technologies Chairman and Chief Executive John Gremp in a statement.

"We have complementary skills, technologies and capabilities which our customers can access on an integrated basis or separately as they prefer," said Technip Chairman CEO Thierry Pilenko.

Mr. Pilenko is slated to become the merged company's Executive Chairman, with FMC Technologies' President and Chief Operating Officer Doug Pferdehirt to become its CEO.

The FMC, Technip merger is expected to be fully completed in early 2017. Each Technip shares will be converted into two shares of the new company, with each FMC Technologies share converted into one share of the new company.

Write to Inti Landauro at inti.landauro@wsj.com and Thomas Varela at thomas.varela@wsj.co

(END) Dow Jones Newswires

May 19, 2016 04:05 ET (08:05 GMT)

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