COPENHAGEN/LONDON (Reuters) - Talks between shipping group A.P. Moller-Maersk (MAERSKb.CO) and DONG Energy DENERG.CO to merge their oil and gas business have stalled after the two Danish firms could not agree on a price, industry and banking sources said on Wednesday.

FILE PHOTO - The MV Maersk Mc-Kinney Moller, the world's biggest container ship, arrives at the harbour of Rotterdam August 16, 2013. REUTERS/Michael Kooren

The breakdown in talks aimed at creating a joint company worth more than $10 billion may open the door for other bids for DONG’s operations, which it is spinning off as it moves away from fossil fuels to focus on offshore wind, the sources said.

Maersk entered talks with DONG in November after announcing plans to merge or spin off its energy assets as part of a major restructuring to shift the company’s focus to its transport and logistics businesses.

The development will be a blow for Maersk, which said on Tuesday it may consider selling assets or cutting dividends as it seeks to retain its credit rating, which is at risk.

In June, Maersk announced it had lost a major oil production contract in Qatar, adding to capital pressures.

Several private equity funds, including EIG Global Energy Partners, have shown interest in DONG, according to banking sources.

Maersk, DONG and EIG were not immediately available to comment.

This was the second merger attempt of the two businesses in recent years, the sources said.

Bringing together the two Danish companies’ oil and gas divisions was seen by many in the industry as a natural fit, creating a company focused on the UK and Norwegian North Sea.

But they were unable to agree on the valuation of their assets and the terms of the merger, several sources close to the talks said.

The negotiations were unlikely to resume “any time soon”, according to one source.

Maersk’s Baa1 credit rating was put under review for a downgrade by Moody’s in September. Last month, Standard & Poor’s lowered the company’s credit rating to BBB from BBB+ with a negative outlook.

Maersk said separately this week its planned acquisition of German shipping company Hamburg Süd will replace some 60 percent of revenue lost when the group spins off its energy division.

Nevertheless, Morgan Stanley analysts said in a note this week that all of Maersk’s energy units remained under pressure due to sluggish markets and finding ways to cut costs.

Deal making in the North Sea has slowed in the past few years partly as a result of a global oil price slump and a sharp rise in the number of assets offered for sale in the aging basin. Companies such as Royal Dutch Shell (RDSa.L), ConocoPhillips (COP.N) and French utility Engie (ENGIE.PA) are seeking to sell their North Sea operations.

DONG produced 89,000 barrels of oil and gas per day in 2016, down from 115,000 barrels daily last year. Its main producing assets include the Ormen Lange, Syd Arne and Laggan-Tormore fields.

Maersk Oil produced an average of 295,000 barrels of oil equivalent in the first nine months of 2016. It suffered a major setback when Qatar chose not to extend its 25-year license to operate the giant Al Shaheen field and award it from 2017 to Total (TOTF.PA). </s> The breakdown in talks aimed at creating a joint company worth more than $10 billion may open the door for other bids for DONG's operations, which it is spinning off as it moves away from fossil fuels to focus on offshore wind, the sources said.

Several private equity funds, including EIG Global Energy Partners, have shown interest in DONG, according to banking sources.

Maersk entered talks with DONG in November after announcing plans to merge or spin off its energy assets as part of a major restructuring which will shift the company's focus to its transport and logistics businesses.

This was the second merger attempt of the two businesses in recent years, the sources said.

Maersk, DONG and EIG were not immediately available to comment.

Bringing together the two Danish companies' oil and gas divisions was seen by many in the industry as a natural fit, creating a company focused on the UK and Norwegian North Sea.

But they were unable to agree on the valuation of their assets and the terms of the merger, several sources close to the talks said.

The negotiations were unlikely to resume "any time soon," according to one source.

Deal making in the North Sea has slowed down in the past few years partly as a result of a global oil price slump and a sharp rise in the number of assets offered for sale in the ageing basin. Companies such as Royal Dutch Shell ( ), ConocoPhillips ( ) and French utility Engie ( ) are seeking to sell their North Sea operations.

DONG produced 89,000 barrels of oil and gas per day in 2016, down from 115,000 barrels daily last year. Its main producing assets include the Ormen Lange, Syd Arne and Laggan-Tormore fields.

Maersk Oil produced an average of 295,000 barrels of oil equivalent in the first nine months of 2016. It suffered a major blow when Qatar chose not to extend its 25-year license to operate the giant Al Shaheen field and award it from 2017 to Total ( ). </s> (Updates Swift Transportation, Anglo American, AT&T;, Rent-A-Center, Eskom and Bain Capital; adds Maersk, Whole Foods, Stefanel, Banco and Xcerra)

April 10 (Reuters) - The following bids, mergers, acquisitions and disposals were reported by 1940 GMT on Monday:

** Activist investor Jana Partners LLC disclosed an 8.3 percent stake in Whole Foods Market Inc as it looks to shake up the company’s board, while pushing it to explore strategic options, including a potential sale.

** Two private equity funds that have agreed to take over loss-making Italian clothing company Stefanel plan to relaunch the brand and sell it within five years, a source at one of the funds said.

** Spain’s struggling Banco Popular is looking at a another capital hike to clean up a balance sheet weighed down by billions of euros in toxic assets and would consider a merger deal, its new chairman said.

** A unit of a large China-based semiconductor investment fund has agreed to acquire U.S. semiconductor testing company Xcerra Corp for $580 million in cash, the companies said.

** World No. 1 shipping company Maersk Line gained EU antitrust approval for its acquisition of Hamburg Sud after agreeing to pull the German company out from five consortia on trade routes to address competition concerns.

** AT&T; Inc said it would buy Straight Path Communications Inc, a holder of licenses to wireless spectrum, for $1.25 billion in an all-stock deal as it aims to accumulate the airwaves it needs for a next generation network.

** German food company Frosta said it was talking to KitKat maker Nestle about buying its Italian frozen food business.

** Malaysia’s Petronas has pitched an estimated $1 billion stake in a prized upstream local gas project to potential bidders including Royal Dutch Shell, ExxonMobil Corp , Thailand’s PTT Exploration and Production and Japanese firms, sources familiar with the matter said.

** Ski resorts operator Aspen Skiing Co LLC and private equity firm KSL Capital Partners LLC will buy Intrawest Resorts Holdings Inc for about $1.5 billion, including debt, Intrawest said.

** The pressure on Rent-A-Center Inc to auction itself increased after Marcato Capital joined fellow activist investor Engaged Capital to force the rent-to-own furniture retailer to pursue a sale rather than a “risky” turnaround plan.

** Trucking and logistics operators Swift Transportation Co and Knight Transportation Inc are merging in a stock-swap deal, creating a company with a market value of more than $5 billion.

** Buyout groups Bain Capital and Cinven won an auction for German drugmaker Stada on after a surprisingly large increase on a previous bid valued the company at about 5.3 billion euros ($5.6 billion).

** Turkey’s Vestel is in talks to buy the television unit of Japan’s Toshiba Corp, a Vestel official said, a deal that could be worth a few hundred million dollars and could expand the Turkish firm’s global presence.

** Anglo American will sell its Eskom-linked thermal coal operations in South Africa for $166 million, it said, marking an important step in the mining giant’s strategic overhaul to sharpen its focus on three commodities.

** China’s HNA Holding Group Co. said it would make an offer to acquire Singapore-listed logistics firm CWT Ltd for $1 billion.

** A consortium of investors led by Indian private equity fund True North has agreed to acquire Religare Enterprises Ltd’s health insurance business in the country, the groups said in a joint statement on Sunday. (Compiled by Komal Khettry and Laharee Chatterjee in Bengaluru) </s> April 23 (UPI) -- Norwegian offshore services company Subsea 7 announced Monday it made a $2 billion unsolicited bid to take over McDermott International, a U.S. rival.

Subsea 7 said it was offering $7 per share for McDermott, which is a 16 percent premium to Friday's closing price. A similar proposal from Subsea 7 was tabled Friday, but rejected by McDermott shareholders.

"We see significant merit in such a transaction for all shareholders, and with our financial and legal advisors continue to be open to discussions," Jean Cahuzac, Subsea 7's chief executive officer, said in a statement.

The proposal from Subsea 7 is the latest in a steady string of mergers for companies that provide services for the upstream, or exploration and production, side of the energy sector. Subsea 7 and Schlumberger, the largest services firm in the world, formed a joint venture partnership in February that was based on a 2015 arrangement to coordinate broad offshore development work under one umbrella.

Schlumberger last week reported first quarter earnings of $7.8 billion were up 14 percent from the same period last year, but down 4 percent from the fourth quarter.

McDermott, meanwhile, is working on a $6 billion merger with engineering firm Chicago Bridge & Iron. Both signed contracts for work in Saudi Arabia and the merger proposal in December followed the $4.5 billion in agreements signed between the Saudi Arabian Oil Co., known informally as Saudi Aramco, and a handful of service contractors for "megaprojects" envisioned in the energy-rich kingdom.

McDermott offered no comment on the Subsea 7 offer. Last week, David Dickson, the company's CEO, said it was logical for his company to team up with CB&I as it would diversify McDermott's client base. All of McDermott's shareholders were called on to vote for the merger.

Subsea 7, for its part, said it was keen on discussing a sweeter offer with McDermott's management.

"The proposal is subject to the termination of McDermott's pending transaction with CB&I," the Norwegian company stated. </s> The merger between GE and Baker Hughes' oil and gas businesses will create the world's No. 2 oilfield services provider. Fred Katayama reports. </s> Baker Hughes got knocked to the mat pretty hard when its planned merger with Halliburton — a longtime rival in the oil field services industry — fell apart in the face of U.S. Justice Department antitrust qualms earlier this year. But the Houston-based oil field services company is once again reportedly preparing to combine forces with General Electric's oil division, according to various reports.

The news isn't a surprise by any stretch of the imagination. There have been rumblings that GE might step up as the new suitor ever since the justice department came out against the original proposal to combine Halliburton and Baker Hughes in April.

The feds arguably had reason to look askance at the pitch to allow the second- and third-largest oilfield service companies in the United States to become one mammoth company, but they took their time coming to this conclusion. Halliburton announced the $34 billion agreement in November 2014, but the two companies then spent more than two years spinning their wheels as they waited for Department of Justice approval that was never came.

When the deal with Halliburton was in the works and still seemed like a real possibility, Baker Hughes, as the company being acquired, made room for Halliburton by laying off employees and selling otherwise profitable businesses in anticipation of a merger that was ultimately doomed. Once that agreement officially fell apart, Baker Hughes was left in a tricky situation, since it now had gaps in its own company structure at the same time that oil prices were still slumping.

Thus, GE entered the scene with a long history in the oil industry — although it hasn't been as much of a focus for the Boston-based giant in recent years — and ready cash to put on the table.

Now, it looks like these two have found a way to make a deal. In exchange for about $30 billion, GE will expand its oil business by teaming up with Baker Hughes, the third-largest oil field services company in the United States. If the deal goes through, the new company would bring together a slew of capabilities in everything from oilfield services, equipment manufacturing to technology, according to a GE statement.

“Baker Hughes obviously has been vulnerable since, but really this is a strategic decision by GE,” Ed Hirs, an energy economist at University of Houston, says. “GE has forever said that its success is in being number one or two in the markets in which it plays. It was not at the top of the market in this industry before, but with this combination with Baker Hughes it will be.”

The thinking goes that by working together, the two companies will be able to compete with Schlumberger, and Halliburton, the two largest oilfield service companies in the United States, Reuters notes. But at the same time, this new entity may not offend the justice department's antitrust sensibilities the way the previous offer did.

For one thing, this merger makes sense based on the current state of the oil industry itself. Prices have finally rallied, giving some people enough hope believe the downturn is finally drawing to a close. But even if this proves to be the case, the oil industry has gone through a rough couple of years.

More than 100 oil field service companies in North America have declared bankruptcy in 2015 and 2016, while oil exploration companies were forced to slash millions in spending on exploration to help get them through the worst financial plunge the industry has seen in decades. More than 350,000 jobs were cut globally as the industry streamlined and worked to pare down costs enough to deal with the nosediving oil prices.

Once the deal is officially closed — it's expected to be inked sometime in the middle of next year — GE will end up owning about 62 percent of the new company. Meanwhile, Baker Hughes CEO Martin Craighead would be vice chairman while Lorenzo Simonelli, CEO of GE Oil & Gas, would have the same position at "the new Baker Hughes" according to GE head honcho Jeffrey Immelt. The new iteration of the company would have headquarters in both Houston and London.

However, it's looking like GE and Baker Hughes have a decent chance of pulling this merger off since the two companies don't overlap so much as complement each other, as Bloomberg observed. That should make the feds much more simpatico with this combo.

The DOJ should look more kindly on this merger, simply because the underlying businesses don't compete that much. "There's some synergy between GE and Baker Hughes, but they don't have any real overlap,” Hirs says. “Basically, by combining the two companies you're not increasing the concentration in the business lines, because the lines don't overlap. With the other deal you would have been removing a competitor but you're not doing that with this one.”

Since Baker Hughes has already been through this before, hopefully the company won't have to make any more cuts or alter itself too much to fit with GE.

And fingers crossed that the folks over at Baker Hughes insist on a if-this-falls-apart prenup like the $3.5 billion one they had with Halliburton. There's certainly no harm in hedging your bets, especially when you're betting companies, millions of dollars and, you know, people's jobs. It just makes sense. </s> General Electric Co ( ), banking on a recovery in oil prices, said on Monday it would merge its oil and gas business with No. 3 oilfield services provider Baker Hughes Inc ( ).

GE will own 62.5 percent of the new company, which will have combined revenue of $32 billion, while Baker Hughes shareholders will own 37.5 percent.

Baker Hughes shareholders will get a special one-time cash dividend of $17.50 per share after the deal closes. </s> Chicago Bridge & Iron Co. was only a week away from tying the knot with the Houston engineering frim McDermott International. But Subsea 7 has swooped in to break-up the deal, offering sweeter terms McDermott to walk away from CB& I and combine with the U.K. company.

McDermott shares soared Monday after Subsea 7, a London engineering company, announced a hostile, a $2 billion bid for McDermott. McDermott rejected the offer, saying it preferred its pending merger with CB&I of The Woodlands, but investors still drove McDermott stock up nearly 16 percent.

A tie up between McDermott and Subsea 7 would create the largest supplier of subsea equipment - umbilicals, risers and flowlines - that connects offshore platforms to the wells and pumps that move oil from the bottom of the ocean, propelling the combined company past European rivals TechnipFMC and Saipem. The deal would come as big oil companies prepare to move forward with more offshore projects than last year, a projected two-thirds increase as Brent crude from the North Sea, the global oil benchmark, hovers close to $75 a barrel.

“A lot more oil field projects will actually be commercial at these prices,” said Audun Martinsen, an analyst at Norwegian research firm Rystad Energy. “It’s going to be much more active than last year.”

In a letter last week, Subsea 7, which declined to comment, told McDermott it’s willing to raise its initial bidding price of $7 a share -- 15 percent premium over the average share price over the past 20 business days - but that it needs to enter official merger talks and gather operational information to assess how much it would pay. Subsea is banking on investors pressuring management to take a closer look at the deal, or move the shareholder vote on the CB&I transaction from May 2.

Subsea executives haven’t talked about the company’s next move will be, but said they have had informal discussions before with McDermott officials about the possibility of a closer relationship.

One big reason Subsea 7 wants to buy McDermott is that McDermott earns 90 percent of its oil business revenue from the Middle East and Asia, where it has contracts with Saudi Aramco, and is building large projects in India, as well as Australia. Eighty-five percent of Subsea 7’s revenue comes from the North Sea, Africa and North and South America.

Rystad said a spate of new offshore projects could lift McDermott’s annual market growth 6 percent if it went with Subsea 7; 4 percent if it sticks with CB&I. Combined, Subsea 7 and McDermott would have more than $9 billion in a backlog of orders and more than $6 billion in revenue.

“We believe that we are offering a superior proposal to your proposed combination” with CB&I, Subsea Chairman Kristian Siem and CEO Jean Cahuzac said in the letter.

McDermott said it rejected Subsea 7's offer because it wasn’t in the best interests of the company or shareholders because it undervalues the company. It plans to move forward with a shareholder vote on the CB&I deal next next week. egulators have already signed off on it. The company declined to comment.

Shareholder advisory firms Glass Lewis and the Institutional Shareholder Services have both recommended McDermott investors vote for the pairing with CB&I, saying the transaction diversifies its business lines and geographic footprint, could increase revenue growth in new markets and cut costs.

But McDermott investors have been skeptical of the deal with CB&I, an energy engineering and construction that focuses on refining, petrochemical, LNG and power projects. Those investors wonder what good it would do to diversify into those businesses, which don’t seem to be growing as fast as the offshore sector this year. Rystad estimated CB&I’s businesses would remain largely flat this year as the offshore sector begins to recover after a long downturn.

Should McDermott choose Subsea 7, it could leave CB& I in the lurch. CB&I has struggled in recent years to the point it was at risk of violating loan agreements last summer before reaching deals with lenders, which including selling its technology unit to pay off most of its debt. CB&I’s stock price has dropped from more than $80 a share at the height of the oil boom in 2014 to $12.65 a share on Monday.

CB&I did not respond to a request for comment.

Although the McDermott-CB&I deal was touted as a merger of near equals, McDermott is the acquiring company and the McDermott leadership would remain in charge if the deal was completed. When the McDermott-CB&I merger was announced in December, McDermott was valued at more than $2 billion. McDermott’s stock market value subsequently slipped, falling to $1.73 billion by Friday, before surging to almost $2 billion on Monday.

For Subsea 7, McDermott is the only company it could buy that would put it at the top of the subsea engineering market. Rystad Energy believes oil companies will sanction 60 percent to 70 percent more offshore projects this year than last, and that a tie up between the two subsea engineering firms would give them 24 percent of the market for umbilicals, risers and flowlines. TechnipFMC has about 20 percent of that market, and Italy’s Saipem has 15 percent.

"The train is about to leave the station," Martinsen said.

Subsea 7 has its operational headquarters in London, but is incorporated in Luxembourg and trades on the Norwegian stock exchange, where its share’s rose about 1 percent Monday. The company has 10,500 employees globally.

McDermott, based in Houston, has 11,800 employees worldwide. CB&I, based in the Woodlands, has 26,400.

McDermott’s stock gained 95 cents, of 15.7 percent, to close at $7 a share. CB&I’s stock fell 8 percent from Friday’s close, losing $1.21 to end at $13.38. </s> AMSTERDAM - Royal Dutch Shell expects to pump out all the fossil fuel reserves listed on its balance sheet, its chief executive said, dismissing concerns that production limits in the wake of the Paris climate accord could hit the energy giant's valuation.

In an interview with Dutch newspaper Het Financieele Dagblad, Ben van Beurden said the issue of "stranded" reserves - deposits in the ground that cannot be used because of carbon emissions limitations - would have no impact on balance sheets.

"The company is valued on producable reserves that we can produce in the next 12 or 13 years," he said. "We should certainly be able to produce those under any climate outcome. Even if global temperatures can only rise by 2 degrees."

The Paris Climate Agreement, which came into force this month, commits almost 200 countries, including China, the United States and the European Union, to limiting temperature increases to 2 degrees and weaning the world economy off fossil fuels.

The Anglo-Dutch energy giant, the world's third largest by market capitalisation, has bet heavily on a lower-carbon future, with investments in wind and renewables capped by the $50 billion acquisition of British Gas in February.

Van Beurden was also skeptical that revaluation of reserves after the climate deal could trigger a financial shock, saying that the oil price's collapse from $120 to $30 a barrel showed the industry's ability to weather much larger shocks.
Merger talks between Danish oil and gas corporations DONG Energy and Maersk have reached an impasse over valuation.