Don't give up! Global merger of two major life platform shipowners rejected

2019-11-08 09:00

Prosafe's merger proposal was rejected by the Norwegian Competition Authority due to alleged monopolistic practices, but Prosafe remains resolute and will appeal the decision.

In June of this year, Prosafe and Floatel, two of the world's largest owners of offshore accommodation platforms, announced a merger, creating the world's largest operator of offshore accommodation platforms. Prosafe owns and operates nine platforms, each accommodating 300 to 500 people, with two more new platforms to be delivered within the next five years. Floatel's fleet comprises five platforms, each accommodating 440 to 550 people.

However, the Norwegian Competition Authority recently decided to block the merger of Prosafe and Floatel. The Authority believes the merger would lead to increased costs for customers of offshore accommodation services, as the transaction involves the two largest and closest competitors in the Norwegian offshore accommodation services market.

Currently, Prosafe and Floatel are the only providers of modern semi-submersible accommodation platforms on the Norwegian continental shelf, and the platforms offered by other providers on the Norwegian continental shelf are not entirely comparable. Therefore, the Norwegian Competition Authority points out that once merged, other suppliers would be unable to compete for all contracts.

In its recently released third-quarter report, Prosafe stated that it will appeal the decision of the Norwegian Competition Authority and will continue to strive for permits in Norway and the UK.

In addition to Norway, the merger of Prosafe and Floatel has also been questioned by the UK competition regulator. The Competition and Markets Authority (CMA) investigation found that Prosafe and Floatel are the two largest suppliers in the market, owning the vast majority of semi-submersible offshore accommodation platforms in Northwest Europe. The two companies compete fiercely and have consistently secured most of the market's contracts.

Therefore, the CMA believes that if the merger proceeds, Prosafe and Floatel's clients will face higher prices or lower quality bids in offshore accommodation platform tenders due to insufficient competition. The CMA has therefore decided to conduct a more in-depth second-phase investigation into the merger.

Prosafe stated: "To proceed with the merger with Floatel to create a stronger and more sustainable company, Prosafe will continue to seek competition permits. The potential merger with Floatel also requires approval from lenders and Prosafe's extraordinary general meeting."

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