Published: May 19, 2016 2:57 a.m. ET

PARIS–FMC Technologies and French oil-services rival Technip Thursday said they will merge in a $13 billion deal, a sign of accelerating consolidation in the sector hit hard by spending cutbacks by large oil groups amid the recent slump in crude prices.

The two companies have signed an agreement to merge in an all-stock transaction, FMC and Technip said in a joint statement. The merged company will be named TechnipFMC. “Each company’s shareholders will own close to 50% of the combined company,” it said.

The merger will allow the companies to cut costs by $400 million annually from 2019 on, the statement said.

Consolidation in the oil-service business is a response to the collapse in oil prices in the past two years, a rout that has squeezed margins at oil-industry suppliers sometimes even more severely that oil companies as major oil firms often have other sources of profit, such as refining or producing petrochemicals, to partly offset plunging revenue from oil production.

The FMC, Technip merger is expected to be fully completed in early 2017.

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