KUALA LUMPUR, Aug 5 (Reuters) - The boards of Malaysian oil and gas companies Kencana and SapuraCrest have approved a proposed $4.0 billion merger plan, the companies said in separate stock exchange filings on Friday.
The merger, which is the largest in the Malaysian oil and gas space, will create the fifth-largest oil and gas services firm in the country and will operate under the name Integral Key, which is presently unlisted.
Both boards said on Friday that it has resolved to approve the proposal, which will see Kencana shareholders receive the equivalent of 3.00 Malaysian ringgit in Integral Key shares and cash.
As for SapuraCrest, shareholders would receive the equivalent of 4.60 ringgit per share in shares and cash, according to the proposal.
Dwindling supplies of domestic oil and gas have prompted state oil firm Petronas to accelerate its capital expenditure to acquire new assets, and Malaysian companies are being encouraged to grow themselves to win greater portions of jobs.
The Kencana and SapuraCrest merger will also allow them to better compete offshore against international heavyweights, the companies said.
The proposal was still subject to approval by shareholders of both companies.
Shares of Kencana had fallen 3 percent to 2.87 ringgit per share on Friday, in line with broader market trends, while SapuraCrest shares were down 1.8 percent to 4.41 ringgit each. (Reporting by Min Hun Fong; Editing by Purwa Naveen Raman)