FMC Technologies and Technip appear poised to do what larger oil service and equipment providers Halliburton and Baker Hughes couldn’t—close a merger during the market downturn.

The $13-billion combination of U.S. subsea-equipment supplier FMC with Paris-based Technip will deliver at least $400 million in annual pretax savings in 2019, the companies said Thursday. FMC investors will get one share in the new company for each they own, while Technip stockholders will get two.

Industry peers Halliburton and Baker Hughes had also tried to join forces to weather the rout, but called off their planned merger this month amid resistance from regulators in the U.S. and Europe over concerns about reduced competition. By contrast, Technip’s engineering and construction for large offshore projects complements FMC’s flow-control subsea equipment, Bill Herbert, an analyst at Simmons & Co., said Thursday in a phone interview.

“The Halliburton-Baker transaction was a multifaceted transaction encompassing classic consolidation of several overlapping competitive product service lines,” Herbert said. “Technip and FTI? They’re completely different animals. There is no overlap whatsoever.”

Spending Cuts

The companies are combining at a time when tumbling crude prices have led customers to cancel projects and demand lower fees from suppliers, sapping earnings for oil-field drillers, servicers and engineers. A 55% drop in oil since mid-2014 forced oil explorers to slash over $100 billion in spending last year and has led to more than 350,000 jobs cut globally in the industry.

Technip, Europe’s biggest oil-services company, was valued at $6.19 billion as of Wednesday’s close, having shrunk by a quarter over the past year. That compares with a $6.49 billion capitalization for FMC, which declined more than 30% in the period. FMC is the world’s largest provider of subsea equipment to the oil industry.

“I think this deal has a very high likelihood of being approved,” said Sean Boland, an antitrust lawyer at Baker Botts LLP in Washington who represented Halliburton in the Baker Hughes deal. He did not represent anyone in the FMC-Technip deal.

The new entity, TechnipFMC, will be listed in Paris and New York, according to a joint statement. Technip CEO Thierry Pilenko will be executive chairman while Doug Pferdehirt, president and COO of FMC, will serve as CEO. Each company’s shareholders will own close to 50% of the combined group.

‘Significant’ Synergies

“The synergies targeted are significant—and above what we expected” given the lack of “overlap” between the two companies, said James Evans, an analyst at Exane BNP Paribas in London. Since they don’t compete directly with each other, the deal is more likely to succeed than the blocked transaction between Halliburton and Baker Hughes, he said in a note.

Technip jumped as much as 14% in Paris trading on Thursday, and was up 6.8% to 49.51 euros as of 5:14 p.m. local time. FMC fell 2.6% to $27.90 in New York.

“We are complementary companies,” Pilenko said at a press briefing in the French capital. “If you stay narrow, sooner or later you’re going to be commoditized.”

Joint Venture

Bloomberg reported last year that Technip and Houston-based FMC were in negotiations. The companies had already announced a joint venture for offshore fields, called Forsys Subsea, in March 2015 as they sought to cut costs to ride out the market downturn.

“The fact they already have this joint venture, they’re going to be able to point to that and say, ‘We’ve been doing this already. We’re not really head-to-head competitors. We’re complementary companies,’” Boland, of Baker Botts, said.

The new entity will be based in Paris, Houston and London. Technip and FMC had combined sales of about $20 billion last year and earnings before interest, taxes, depreciation and amortization of about $2.4 billion, according to the statement.

Change Needed

“When oil prices and operator cash flows improve, offshore production won’t be fully developed unless the industry improves project economics,” John Gremp, chairman and CEO of FMC, said on a conference call. “To do this requires significant and sustainable cost reduction, and to achieve this requires change.”

Technip and FMC expect the deal to close in early 2017, subject to shareholder and regulatory approvals. The merger will have an “implementation cost” of about $250 million, according to Pilenko.

“The potential transaction may spark further consolidation within the subsea industry,” Goldman Sachs Group Inc. said in a note. The bank is advising Technip on the deal along with Rothschild & Co. Evercore Partners Inc. and Societe Generale SA are working with FMC.