Kværner undeterred by Aker bid rejection

Kjell Almskog, president and CEO of Norwegian contracting giant Kværner AS, promised his company would push on in its bid to take over Aker Maritime AS despite its rival's flat-out rejection of today's 4.5 billion kroner all-share offer�its fourth approach in 15 months�as far too low. The latest overture from Kværner comes after three previous sit-downs with Aker failed to reach agreement on price.


Darius Snieckus
OGJ Online

LONDON�Kjell Almskog, president and CEO of Norwegian contracting giant Kværner AS, promised his company would "push on" in its bid to take over Aker Maritime AS despite its rival's flat-out rejection of today's 4.5 billion kroner all-share offer�its fourth approach in 15 months�as "far" too low.

The latest overture from Kværner comes after three previous sit-downs with Aker failed to reach "agreement on price." Were today's bid to be ultimately successful, the result would be the creation of an international construction combine with 21,000 employees in 40 countries and revenues amounting to some 60 billion kroner/year.

Kværner is offering Aker shareholders an exchange of a 0.79 share in the new combined group for every Aker share held, a ratio roughly equal to 80 kroner/share and representing a "premium of 39% based on the last 5 days of trading in both" companies' shares, "fairly reflect[ing]," in Kværner's thinking, "the value of both Kværner and Aker."

Speaking to a London audience via satellite, Almskog said his company was "not at all scared off" by Aker's snub of his company's takeover offer. "We intend to push on and prepare the offer and distribute it to [Aker's] shareholders," he said, adding that Kværner "continued to believe [the acquisition] makes industrial sense."

In a statement this morning, Kværner Chairman Christian Bjelland argued the offer was "a value-enhancing opportunity" for everyone involved. "As our company starts to emerge from a comprehensive restructuring program�it's time to move forward," he said. "The board firmly believes that the proposed acquisition...will be in the best interest of shareholders in both companies."

The proposed combine
Kværner suggests the combination of the two contractors�both of which were hard hit by the last commercial slowdown in the North Sea offshore construction market�would produce a good fit, adding "strength particularly in terms of the technology and product portfolio through Kværner's prominent position in subsea products and Aker's recognized deepwater technology."

"Combined with Aker, Kværner will be second to none in the oil and gas products and technology area," suggested Almskog. "This market is changing, and the supplier industry must respond. In a few years from now, we believe there will only be a handful of truly global players dominating this industry. And we intend to be one of theme," he said.

Beyond creating "a leading player" on the two groups' home patch�the North Sea�Kværner reasons the takeover would also result in a company with "a strong position" in the Gulf of Mexico and improved chances of "win[ning] projects in emerging markets such as the Caspian Sea and the waters off West Africa and Brazil."

In light of the fact that the takeover bid comes less than a month after Aker acquired slightly more than 26% of Kværner at a cost of 2.6 billion kroner, Almskog added that amalgamation would also "assist in neutralizing potential conflicts in the marketplace."

With new deepwater developments certain to generate the majority of work for oil and gas industry contractors worldwide in the coming years, the prime motivation behind the takeover bid, acknowledged a Kværner spokesman, was Aker's established presence in regional deepwater markets including the US gulf via its popular spar platforms. Last month Aker was contracted to design and build another spar by Vastar Resources Inc. for the operator's Horn Mountain development.

Kværner calculates annual synergies of more than 250 million kroner for the combined group, derived from a joint effort in technology development, procurement economies, reduced tender costs, and overheads. In Norway, market overcapacity caused by the takeover would mean a rationalization of the two companies' six fabrication yards, though Almskog stressed "no decision had been made [as to] which would close."

The offer, which Kværner said would depend on its gaining the approval of shareholders representing more than 90% of shares in Aker and on Aker retaining its present ownership in interests in Kværner, will be sent out to all Aker shareholder within 2-3 weeks. Some 200 million Kroner has been set aside for restructuring cost should Kværner's proposal finally be given the green light.

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