Kvaerner and Aker Form Shipbuilding Company
Kvaerner announced that it has agreed with Aker RGI Holding to establish a jointly owned shipbuilding management company. Together, the two groups own 12 shipyards in Europe, and one in the USA and Brazil. These yards have a total of some 13,500 employees – with combined revenues of NOK 20 billion.
Kvaerner and RGI have on a number of previous occasions stated the intention to merge their respective shipbuilding operations in the future. The parties have, however, agreed to postpone such negotiations until a better assessment of the financial and operational issues have been concluded, and until such time as the value of the operations can be more precisely determined. Both parties agree that substantial synergies can be achieved and that the value of their respective operations will increase through the establishment of a joint management company.
The management company, to be called 'Aker Kvaerner Yards AS', will be owned 50:50 by Kvaener ASA and Aker RGI Holding ASA, and will become effective from February 15, 2002. The Company will co-ordinate the operation of the yards – and work to identify and realize synergies. The Company will have a lean staff, and its costs will be divided between the yards. The new Company will be headed by Leif A Langoy, currently CEO of Aker Yards, while Kvaerner's President & CEO, Helge Lund will be Chairman. Hans Petter Finne, currently head of Kvaerner's Shipbuilding business area will continue to work for Kvaerner during a transition period, following which he will leave the Group.
The shipbuilding operations of Kvaerner and Aker combined will have a leading position within several market segments, such as cruise ships, container vessels, Ro-Ro/Ro-Pax vessels, and offshore service vessels. Taken together, the shipbuilding operations will rank top among European shipyard groups in terms of revenue, and fourth in the world. The combined order reserve for the 14 yards currently comprises some 80 vessels – with a total value of about NOK 35 billion.
The combination of resources under a single management will open opportunities for effective utilization of capacity, and a long sought-after strengthening of the Group level management resources available to the Kvaerner yards. It is anticipated that synergies will emerge from crossover technology/knowledge sharing, strengthened market capability and reduced procurement costs.
The joint management of the shipyards will not affect the legal or financial structure of the shipyards. Kvaerner's Shipbuilding operations will continue to constitute a separate business area of the Group.
Kvaerner and Aker expect that the most significant and immediate synergies can be identified between the German yards – Aker MTW and Kvaerner Warnow Werft. In order to realize these synergies quickly, the management company has been asked to present a proposal for a combination of the two yards to the parent companies, later this year.
Immediate synergies are anticipated at the Kvaerner Philadelphia Shipyard. An exchange of skills, and further initiatives in connection with the current training program utilizing additional experienced personnel, will help to realize further improvements in the yard operations – thereby helping to secure enhanced value for shareholders.