Aker Solutions strengthen its position in the offshore and energy sectors
Aker Solutions is taking industrial action and further strengthening its position in the offshore and energy sectors. This is being accomplished through acquisitions and closer integration of holdings in forward-looking companies in high-margin segments. Over the past year, Aker Solutions has restructured its business in order to strengthen the potential for continued profitable growth. Worth some NOK 2 billion, the present acquisitions support this industrial development. They strengthen the group's position in well intervention, expand its offshore marine operations and further develop its technology portfolio.
"We're increasing our holdings in sound businesses which give us greater strength in our strategic focus areas," says Simen Lieungh, President & CEO of Aker Solutions.
"That establishes a broader foundation for continued industrial development at the interface between energy, the environment and maritime activities - industries with solid long-term growth potential."
The transactions cover 100 percent ownership of Aker Oilfield Services, 50 percent of the shares in Aker DOF Deepwater (previously Aker DOF Supply), 33 percent of the shares in the listed company ODIM and 100 percent ownership of Midsund Bruk. Aker Solutions is also increasing its stake in Aker Clean Carbon from 30 to 50 percent through an equity issue.
"The industrial rationale behind these transactions builds on trends in our markets, and they lay the basis for further development," says Lieungh. "That positions us for the upturn which will come."
Strengthened position within the deepwater segment
Exploration for and production of oil and gas are being pursued in steadily deeper waters worldwide. Oil companies accordingly want ever more advanced technology products, services and marine operations in deep water. Acquiring Aker Oilfield Services and a stake in Aker DOF Deepwater strengthens Aker Solutions' grip on this market. The offshore company DOF is Aker Oilfield Services' marine partner. Even closer co-operation between Aker Solutions and DOF is established through these transactions, creating new and exciting opportunities.
Aker DOF Deepwater has six anchor handling ships under construction. Aker Solutions will, through its ownership in Aker DOF Deepwater, strengthen Aker Marine Contractors' (AMC) leading position as a supplier of deepwater installation, marine operations and services to the oil and gas industry. AMC and DOF are also working on taking a strategic position within the future deepwater pre-set mooring market. Aker DOF Deepwater will in this connection consider chartering two vessels based on ODIM Smart AHTS(TM) technology.
Aker Oilfield Services perform maintenance of oil wells on the seabed in deep waters from large vessels. Aker Solutions' increased commitment to subsea well maintenance and advanced marine operations will be pursued in close collaboration with its major shareholder, Aker ASA, and listed company DOF. Aker has in connection with Aker Solutions' acquisition of Aker Oilfield Services taken over the ownership of Aker Oilfield Services' vessel 718, which will be chartered by Aker Solutions for subsea installation and construction work.
An agreement has also been entered into with Aker Ship Lease AS, a wholly owned Aker subsidiary, and AMC International AS, wholly owned by Aker Solutions AS, concerning a 10-year bareboat charter for a subsea installation and construction vessel (Aker OSCV 06 L, NB 718) under construction by STX Europe. AMC has collaborated with DOF on the vessel's outfitting. Aker Ship Lease has purchased related construction contracts from Aker Oilfield Services for a sum corresponding to their cost price ahead of the share transaction with Aker Solutions.
Further, Aker Oilfield Services will continue to charter the two vessels (NB 716 and NB 705) owned by DOF. As Aker Solutions' new marine partner, DOF will be responsible for operating the vessels in the portfolio.
Aker Oilfield Services and Aker DOF Deepwater have both secured contracts from clients in Brazil.
"Through the collaboration with Aker and DOF, and the acquisition of Aker Oilfield Services, Aker Solutions gets access to first-class tonnage," explains Simen Lieungh. "These vessels will serve as a platform for our equipment and services, without us having to devote our finances to owning ships. Our resources will be freed up for further technology and product development in close collaboration with our customers."
Expansion of technology products portfolio
Products and technologies at the interface between offshore installations and shipping represent another important growth area for Aker Solutions. Developing a range of services for the whole product lifecycle in this market is a natural choice. Aker Solutions is acquiring two strategic participants in this market through a 33 percent shareholding in technology company ODIM and the takeover of niche player Midsund Bruk.
Closer collaboration with ODIM and Midsund will expand Aker Solutions' technology and product portfolio. Assessing ODIM's portfolio in relation to the group's Aker Pusnes subsidiary will be particularly interesting. ODIM and Midsund Bruk are profitable companies with EBITDA margins of 18.6 and 16.6 percent respectively in 2008.
"These acquisitions broadens our product and technology base, and means that we can combine expertise and technology components to create new commercial opportunities," says Lieungh.
Environmental growth
Aker and Aker Solutions have developed the specialist carbon capture company Aker Clean Carbon at the interface between energy and the environment. Among other assignments, this company is due to build part of the carbon capture facility at Mongstad near Bergen in Norway. Aker and Aker Solutions have agreed to become equal partners in the company. Aker Solutions' shareholding is being increased from 30 to 50 percent through an equity issue.
Investment and financing
The transactions announced above are discussed in detail in the attached overview. Collectively, they represent an investment of about NOK 2 billion by Aker Solutions. Roughly NOK 250 million of this amount represents the acquisition of shareholder loans. The companies being acquired have investment programmes totalling just over NOK 2.5 billion in the next few years.
Aker Solutions will finance the relevant transactions and future investments through a new bond loan of approximately NOK 2 billion of which NOK 1.75 billion is already committed.
Aker and Aker Solutions have given particular emphasis to their duty of care in conducting negotiations over the companies involved in the transactions. These discussions have been pursued in accordance with good practice for transactions between related parties. A third company, DOF Subsea ASA, is also a party to the transactions.
The agreements negotiated have been considered by the governing bodies of the respective companies, including Aker's audit committee, and external advisers have provided fairness opinions. The agreements have also been submitted to the board of Aker Holding AS.
DnB NOR has been Aker Solutions ASA's financial adviser and the law firm BA-HR has been the legal adviser in these transactions.
