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2020-07-17

Contemplated merger between Kværner ASA and Aker Solutions ASA

Kvaerner and Aker Solutions have for many years been successful suppliers to customers operating energy production facilities, especially to oil and gas companies. Customers in this market are increasingly asking for solutions with reduced environmental footprint, and new customers ask for renewable energy solutions. "By combining the two companies and their complementary resources, we will be able to deliver a more complete offering to a global energy industry," says Leif-Arne Langøy, current chairman of Kvaerner and also the proposed chairman for the new combined company.

The merger is based upon the principle of equality. The merger will create an organisation with the required size and financial strength to compete and succeed in the growing market for renewable and sustainable energy, and generate value for shareholders, customers and society. The consolidation will take the form of a statutory merger whereby Aker Solutions ASA will absorb Kværner ASA, in accordance with the Norwegian Public Limited Liability Companies Act.

A dedicated supplier

The combined company will leverage industrial software and digital technology to optimise output and improve efficiencies in customer projects and operations. The merged entity will be a dedicated supplier that adds value by offering early front-end customer engagement, concept and system solutions for renewables and decarbonization projects in offshore wind, carbon capture, utilization and storage, electrification and emerging energy segments such as hydrogen. The combined company will utilize its global footprint in brownfield services and subsea to enter international renewables markets.

Furthermore, the merged entity will do fabrication at own facilities or in cooperation with partners around the world. The two companies' solutions and technologies provide a stronger offering of renewable energy solutions.

"The combined entity will be a dedicated execution partner for delivery of complete projects for new energy production facilities, for example oil and gas production platforms or subsea systems, or offshore wind power installations", says Kjetel Digre, Aker Solutions' onboarding CEO and also the proposed CEO for the combined company.

"We will continue to finetune and improve our internal capacities, to ensure that we always have a sound capacity utilisation. In addition to our own capabilities, we will continue to collaborate closely with partners," Digre continues.

Aker Solutions had at the start of 2020 approximately 16 000 own employees, and Kvaerner had about 2 800. As an adaption to changing markets, both companies have prior to the merger, commenced necessary adjustments of capacities, costs and positions. Most of the staff reductions will be completed before the merger is implemented. The combined cost-cutting initiatives aim to reduce the fixed cost-level by about NOK 1.5 billion on an annualized basis, from 2019 until 2021.

"Combining Aker Solutions and Kvaerner in one company will bring together expertise and innovative spirit of two strong and compatible cultures, to create value for customers, shareholders, societies and employees. This is the right move for the future", says President and CEO of Kvaerner, Karl-Petter Løken.  

About the new company

The combined company will have about 15 000 employees in more than 50 locations around the world. It will have about 8 000 employees in Norway. Combined 2019 revenues for the companies were NOK 38 billion, with an EBITDA of NOK 2.7 billion (including special items).

The new entity will have operations in about 25 countries. This includes offices for concept development, engineering and project execution, as well as effective fabrication yards and facilities for manufacturing of advanced equipment.

In the planned merger process, a new organisation model will be established. Kvaerner's CEO, Karl-Petter Løken will be a member of the new company's Executive Management Team, and will assume responsibility for the Renewables segment. Idar Eikrem will take on the role as of CFO in Aker Solutions from 1 August 2020. Other key management positions will be concluded during the coming weeks.

Øyvind Berge in Kvaerner's finance department will from 1 August act as CFO in Kvaerner until the merger of Kvaerner and Aker Solutions is completed in November. Berge has long experience from leading positions in Aker and Kvaerner, and has previously held the position as CFO for Kværner Stord AS and Kværner International AS. More recently Berge has acted as Senior Vice President for Business Controlling in Kvaerner.

A presentation about the merger will take place today at 10.00 am CET. The presentation will be held in Aker ASA's head office at Fornebu outside Oslo, Norway, at Oksenøyveien 10, Snarøya. It is possible to participate in person, please register your attendance at IR@kvaerner.com.Due to corona restrictions on the number of attendance we encourage you to following the live webcast through the following link https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20200717_5 (https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fchannel.royalcast.com%2Fhegnarmedia%2F%23!%2Fhegnarmedia%2F20200717_5&data=02%7C01%7CSimona.Stromme%40kvaerner.com%7C28ed8095a7d2467bdb3608d828ca29b7%7C20d4745c70614b6d84dc036d4d008aed%7C1%7C0%7C637304196033737615&sdata=W4R9tbXdD5RVv%2Bcmff%2BkrMxX0OiAaUt7WHDRmPGgOxY%3D&reserved=0)

Key terms of the merger

As merger consideration the shareholders of Kværner ASA will receive a number of shares in Aker Solutions ASA based on a volume weighted average price for the shares in Aker Solutions and Kvaerner on the Oslo Stock Exchange during a period of 30 days (incl. both trading days and non-trading days) commencing two trading days after the Aker Solutions shares trades ex the dividend proposed to be distributed in relation to the Aker Offshore Wind and Aker Carbon Capture. One share in Kvaerner shall however always give right to at least 0.7629 shares and maximum 1.1404 shares in Aker Solutions, which in total provides the shareholders in Kvaerner with an ownership interest in the range between 43% to 53% in the combined company. The exact exchange-ratio will be published as soon as it is ready. Fractions of shares will not be allotted, and for each shareholder the shares will be rounded down to the nearest whole number. Excess shares, which as a result of this round down will not be allotted, will be issued to and sold by Skandinaviska Enskilda Banken AB (publ) (Oslo Branch) for the benefit of the new company.

Completion of the merger is subject to approval by the shareholders of each of Aker Solutions and Kvaerner through extraordinary general meetings, expected to be held in September 2020 (the "EGMs"). Aker Kværner Holding AS has undertaken to attend the respective EGMs and vote in favour of the merger. Completion of the merger is also subject to obtaining certain third-party approvals as well as other customary closing conditions, but is not subject to any conditions with respect to financing, due diligence or material adverse change.

Further information about the merger and the combined company will be made available in a prospectus exempted document (the "Exempted Document") to be published by Aker Solutions in  September 2020. The companies will also publish notices for their respective EGMs through separate stock exchange announcements in August 2020.

In preparation for the merger, Aker Solutions and Kvaerner have conducted limited, customary due diligence reviews of certain business, financial, commercial and legal information related to their respective businesses.

Following completion of the merger, the shares in the combined company will continue to be listed on Oslo Stock Exchange.

U.S. Restriction on receipt of Consideration Shares

The Consideration Shares will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act. Consideration Shares will therefore only be delivered to Kvaerner shareholders that are either (i) not a US Person as defined in Regulation S of the Securities Act, or (ii) an "accredited investor" as defined in Regulation D of the Securities Act ("Eligible Shareholders"). Shareholders in Kvaerner that are not Eligible Shareholders will receive cash-in-lieu of the Consideration Shares following a sale of such Consideration Shares as they would otherwise be entitled to receive. Such Consideration Shares as the non-Eligible Shareholders would otherwise be entitled to, will be sold by [a facilitator] for the account of and for the risk of the relevant beneficiary with a proportional distribution of net sales proceeds among the non- Eligible Shareholders.

The Consideration Shares issued to Eligible Shareholders will constitute "restricted securities" under the U.S. Securities Act. As a condition to receiving Consideration Shares, each Eligible Shareholder who is an accredited investor will agree not to offer or sell any of the Consideration Shares received for a period of one year from issuance except pursuant to an applicable exemption from the registration requirements of the U. S. Securities Act.  

THE CONSIDERATION SHARES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OR THE SECURITIES LAWS OF ANY U.S. STATE OR OTHER JURISDICTION. THE COMPANY DOES NOT PLAN TO REGISTER THE ISSUANCE OR RESALE OF THE SHARES UNDER THE U.S. SECURITIES ACT.

THE CONSIDERATION SHARES MAY NOT BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT (A) UNDER A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, AS APPLICABLE OR (C) PURSUANT TO ANOTHER APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT; IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE U.S. STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, ONLY IF AKER SOLUTIONS HAS RECEIVED DOCUMENTATION SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT.

END

For further information, please contact:

Kværner ASA

Investor Relations:
Idar Eikrem, EVP & CFO, Kvaerner, +Mob: +47 950 28 363, email: ir@kvaerner.com

Media inquiries:
Torbjørn Andersen, Vice President, IR & Communications, Kvaerner, Tel: +47 928 85 542, email: torbjorn.andersen@kvaerner.com

This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of Aker Solutions or Kvaerner. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures. Persons into whose posse...

Författare Kværner ASA

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