LONDON�Paris-based subsea contractor Coflexip Stena Offshore Group (CSO) is putting the final touches to a $625 million deal through which it take over the deepwater division of Norway's Aker Maritime ASA, enlarging the 2000 value of the offshore market served by CSO to some $19 billion from around $3-$4 billion. The purchase price amounts to $513 million plus the assumption of net debt estimated at $112 million.
The deal is subject to regulatory approval and the completion of due diligence, but CSO expects the deal to close by Jan. 3, 2001.
The acquisition of Aker's Houston-headquartered deepwater arm is expected to move CSO into the top tier of international offshore contractors, fulfilling "in one stroke" the company's strategic plans to the sharpen its front-end engineering capabilities, expands its geographic presence in deepwater markets, and build the technologies, services, and product lines in which CSO specializes.
Incorporating Aker's deepwater division into the CSO Group, which has a forte in subsea technologies and operations will "provide new opportunities that neither of the groups could have accessed independently," stated CSO. "The [Aker] deepwater division's strong presence in the Gulf of Mexico and its ability to access West African markets and the Caspian Sea completes CSO's strong operations in the North Sea, Brazil, West Africa, and Asia-Pacific," said the French contractor.
On the technological front the tie-up will mean CSO will have access to specialist knowledge of offshore production concepts such as floating production, storage, and offloading vessels, semisubmersibles, and tension-leg platforms, and will be one of only two companies with "exclusive rights" to the deepwater Spar technology for drilling and production. The deepwater division has had a hand in the three Spars installed to date�the US Gulf of Mexico developments Oryx Neptune, Chevron Genesis, and ExxonMobil Diana/Hoover.
Through the deal, CSO also adds dry wellhead concepts to its existing arsenal of subsea wellhead technology.
The scaling up in corporate mass achieved through the takeover, not least by picking up expertise in conceptual field development engineering via Aker deepwater division companies Aker Engineering Inc. and Genesis, will give it the size to tender for "significantly larger" EPIC bids in the future, said CSO.
"The acquisition of Aker's deepwater operations transforms the CSO Group, providing critical mass and expertise in the rapidly growing deepwater segment of the market," said CEO Pierre Marie Valentin.
Aker deepwater division President Svein Eggen added that the combination of the two companies' expertise would translate into an outfit "uniquely well placed" to maintain a leading position in the evolving deepwater sector.
By CSO's calculations, pro-forma results for the enlarged group would have come out at approximately $1.6 billion, spread regionally as follows: 40% North Sea, 31% North America, 10% Brazil, 9% Africa, 8% Middle East and Asia Pacific, and 2% others.
CSO management believes the "excellent fit" between the two companies will translate into synergies, including cost savings, that could reach $30 million in 2003.
As it stands, Aker Maritime�which recently sold its two seismic ships in order to free 750 million kroner in capital to replace short-term financing linked to the purchase of 49% of Aker Gulf Marine�will make more than $500 million on the sale to CSO.
The final price of the acquisition of Aker's deepwater division will be subject to adjustment mechanisms based on audited final statements at the end of the year.
In line with the strategic alliance made between CSO and Technip SA last April, directors of the two companies have approved the investigation of the possibility of Technip's participation in the transaction by purchasing 20% of the Aker deepwater division after the deal is complete. The CSO-Technip agreement was announced in April (OGJ, Apr. 24, 2000, Newsletter).
Meanwhile, CSO announced last week that it planned to investment some $10 million in building a rigid pipe spoolbase in mobile, Alabama to support future offshore pipelay and construction work slated for its CSO Deep Blue ultradeepwater pipelay vessel and CSO Apache construction rigid reel lay vessel (OGJ Online, Oct. 26, 2000).