Contemplated merger between Kværner and Aker Solutions
Kvaerner and Aker Solutions have entered into a merger plan, whereby the two entities will join forces to create a new supplier company with a stronger position as a solid execution partner, enabling sustainable, low-carbon oil and gas production, and accelerating growth in renewable energy industries. Aker Solutions and Kvaerner have agreed to merge the companies based on the principle of equal parties. The name of the new company will be Aker Solutions ASA.
Kvaerner and Aker Solutions have for many years been successful suppliers to customers operating energy production facilities, especially to oil companies with oil and gas fields. 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 proposed new Chairman of Aker Solutions.
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 will absorb Kværner, in accordance with the Norwegian Public Limited Liability Companies Act (the Merger). The combined company will leverage industrial software and digital technology to optimise output and improve efficiencies in customer projects and operations. The combined company will be a dedicated supplier that adds value by offering early front-end customer engagement, concept and system solutions for renewables and decarbonisation projects in offshore wind, carbon capture, utilisation and storage, electrification and emerging energy segments such as hydrogen. The combined company will utilise its global footprint in brownfield services and subsea to enter international renewables markets.
Furthermore, the combined company will do fabrication at own facilities or in cooperation with partners around the world. The combination of the two companies’ solutions and technologies provides a stronger offering of renewable energy solutions. “The combined company 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 installation”, says Kjetel Digre, CEO of Aker Solutions, effective 1 August. He adds, “The company 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.”
The merged company will drive improvement and change by early adoption of new industrial software and automation provided by world-class third-party suppliers. Aker Solutions had at the start of 2020 approximately 16,000 employees, and Kvaerner had about 2,800. As an adaption to changing markets, both companies have prior to the merger commenced necessary reductions of capacities and cost. Most of the ongoing staff reductions will be completed before the merger is implemented. The combined cost-cutting initiatives aim to reduce the fixed cost-level by about EUR 0.14 billion on an annualised basis, from 2019 to 2021.
The combined company will have about 15,000 employees in more than 50 locations around the world, including about 8,000 employees in Norway. Combined 2019 revenues for the companies were about EUR 3.6 billion, with an EBITDA of EUR 0.26 billion. The combined company 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. Kjetel Digre will take the role as CEO and Ivar Eikrem will take the role of CFO of Aker Solutions. Other key management positions will be concluded during the coming weeks.