Expecting to gain in an oil-services market that is showing signs of a recovery, sector engineering-construction giant Technip, Paris, and FMC Technologies, Houston, are set to merge next year to create an estimated $20-billion megafirm, the companies announced on May 19. 

The combined company, to be called TechnipFMC, will be listed on stock exchanges in Paris and New York City. Technip CEO Thierry Pilenko will be executive chairman, while Doug Pferdehirt, FMC president and chief operating officer, will serve as CEO. Each company’s shareholders will own close to 50% of the combined group in a deal valued at $13 billion.

Analysts were generally positive on the combination, noting little of the operating and market overlap or antitrust concerns that, earlier this month, likely sunk a long-planned merger between Halliburton and Baker Hughes. Technip and FMC, which have worked in previous joint ventures, see cost synergies of about $200 million in 2018, possibly doubling the year after. Technip ranks at No. 20 on ENR’s list of theTop 250 Global Contractors, reporting $14.3 billion in total revenue, almost all of it outside France. 

In a May 22 Seeking Alpha note, one analyst notes the creation of a major competitor in subsea oil-field services work. While he points to that business as profitable for Technip, he also cautions that investors may be wary of the firm’s offshore and onshore construction work, which is lower margin and more cyclical. “It remains to be seen what can be accomplished through the merger versus joint venture in terms of gaining a competitive advantage against its peers,” says Jamie L. Cook, lead construction-sector research analyst for investment firm Credit Suisse.