The £500 million transaction is structured by Kongsberg as an acquisition of the marine products, systems and aftermarket services businesses carried out by subsidiaries of Rolls-Royce plc.
The transaction does not include Bergen Engines or Rolls-Royce's Naval Business.
The final purchase price will be determined based on Rolls-Royce Commercial Marine's cash, debt and working capital at time of completion of the transaction.
‘The acquisition of Rolls-Royce Commercial Marine makes us a more complete supplier to the maritime industry,’ said Geir Håøy, CEO and President of Kongsberg. ‘The maritime industry is becoming increasingly globalised and is undergoing considerable technological and market driven changes. With this acquisition we will be strengthening our strategic position with shipowners, shipyards and other customers and partners.’
Kongsberg Maritime delivers systems for dynamic positioning and navigation, marine automation, safety management, cargo handling, subsea survey and construction, maritime simulation and training, and satellite positioning. The company is represented in more than 25 countries, whilst Rolls-Royce Commercial Marine is represented in 34 countries. Rolls-Royce Commercial Marine has approximately 3,600 employees and an annual turnover of NOK 8.9 billion ($1.1 billion), whilst Kongsberg has approximately 7,000 employees and a turnover of NOK 14.5 billion ($1.8 billion). Combined, the companies have equipment and deliveries associated to around 30,000 vessels worldwide.
Kongsberg alluded to the ‘considerable reductions in activity levels’ experienced by Rolls-Royce Commercial Marine in recent months, which it attributed to challenging market conditions within offshore-related activity.
‘A main priority going forward is ensuring profitability, and at the same time being an industry innovation leader,’ said Kongsberg.
The acquisition is also expected to strengthen Norwegian ownership in the Norwegian maritime cluster and provide Kongsberg with a stronger Nordic and international position.
Kongsberg will finance the acquisition through a combination of new equity and a new bond loan. The purchase price will be paid in cash on completion of the transaction.
The new equity will be raised through an underwritten rights issue of NOK 5.0 billion ($620 million). The share capital increase is conditional on approval by Kongsberg’s general assembly with the support from at least two-thirds of the votes. The Norwegian government has communicated that it is positive that the state as an owner participates with its 50% ownership share in the rights issue, pending Parliamentary consent and acceptable terms of the rights issue in line with commercial terms.
The remaining 50% of the rights issue is underwritten by a syndicate consisting of DNB Markets, a part of DNB Bank ASA and Danske Bank A/S, Norwegian Branch and certain larger pre-committing shareholders.
Subject to regulatory clearance, the acquisition is expected to be completed in first quarter of 2019.