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

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 possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.

The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and accordingly may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and in accordance with applicable U.S. state securities laws. Neither Aker Solutions or Kvaerner intend to register any part of their securities in the United States or to conduct a public offering of securities in the United States. Any sale, offer or delivery in United States of the securities mentioned in this announcement will be made solely to U.S. shareholders of Kvaerner who are (i) non-U.S. persons as defined in Regulation S of the Securities Act, or  (2) “accredited investors” as defined under Regulation D of the Securities Act.

In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation, i.e., only to investors who can receive the offer without an  approved prospectus  in such  EEA Member  State. The expression "Prospectus Regulation" means Regulation 2017/1129 as amended together with any applicable implementing measures in any Member State.

This communication is only being distributed to and is only directed at persons in the United  Kingdom that are (i) investment professionals falling within Article 19(5) of the Financial Services  and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only for relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "strategy", "intends", "estimate", "will", "may", "continue", "should" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Aker Solutions and Kvaerner believe that these assumptions were reasonable when made, these  assumptions are inherently  subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control.

Actual events may differ significantly from any anticipated development due to a number of  factors, including without limitation, changes in public sector investment levels, changes in the  general economic, political and market conditions in the markets in which Aker Solutions and Kvaerner operate, Aker Solutions and Kvaerner’s ability to attract, retain and motivate qualified personnel, changes in Aker Solutions’s and Kvaerner’s ability to engage in commercially acceptable acquisitions and strategic investments, and changes  in laws and regulation and the potential impact of legal proceedings and actions. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Neither Aker Solutions nor Kvaerner guarantees that the assumptions underlying the forward-looking statements in this announcement are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this announcement or any obligation to update or revise the statements in this announcement to reflect subsequent events. You should not place undue reliance on the forward-looking statements in this document.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice. Neither Aker Solutions nor Kvaerner undertakes any obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.

Skandinaviska Enskilda Banken AB (publ) is acting exclusively for Aker Solutions in connection with the merger and for no one else and will not be responsible to anyone other than Aker Solutions for providing the protections afforded to its clients or for providing advice in relation to the merger.

Arctic Securities AS is acting exclusively for Kvaerner in connection with the merger and for no one else and will not be responsible to anyone other than Kvaerner for providing the protections afforded to its clients or for providing advice in relation to the merger.

This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities of Aker Solutions or Kvaerner. Neither Skandinaviska Enskilda Banken AB (publ), Carnegie AS, Arctic AS nor any of their respective affiliates accepts any liability arising from the use of this announcement.

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.