Kvaerner Taking Advice on Strategic Growth Alternatives

Kvaerner says it is exploring new strategic opportunities to further strengthen its business and has retained Greenhill & Co. International LLP to advise on evaluating all strategic alternatives. 

Kvaerner (KVAER.OL) has during the first half of 2014 delivered several key oil and gas projects on schedule, won new key contracts and continued to implement cost reduction measures. The company's Board of Directors says it is pleased with how Kvaerner has built a strong position as a competitive contractor recognized for its high quality delivery of demanding oil and gas projects. The Board concludes that the time now is right to explore opportunities  to accelerate the  development of Kvaerner.

Since the establishment of today's Kvaerner organisation in 2011, the company has successfully delivered a wide range of projects. In an industry where delays are costly, Kvaerner is recognized for predictable deliveries, facing global competition  in the oil and gas supplier industry.

"While we succeeded in building a record high order backlog up to 2013, we also received valuable feedback from the oil companies after the bidding rounds in the winter a year and a half ago. This spurred us to accelerate a range of activities to increase productivity and reduce our own cost level. The award in June for two steel jacket substructures to the Johan Sverdrup field confirmed that we are moving in the right direction, and the combination of established expertise and reliability, together with renewed cost competitiveness, once more positions us well for the future. Now, we will use this momentum to consider step changes to further strengthen our business and competitiveness", says Jan Arve Haugan, President & CEO of Kvaerner.

In an industry where several of the competitors are significantly larger, Kvaerner has been awarded contracts and shortlisted ahead of its peers, based on a reputation for quality, timeliness and value-added solutions. This success has been made possible by a flexible business model, with extensive use of subcontractors and long term international partnerships where these enable a more cost effective execution of projects.

Examples of such cooperations include the 10 years strategic alliance agreement with the Chinese COOEC group, cooperation with the leading North American contractor Peter Kiewit & Sons, and the recently established joint venture with KBR, a global engineering, procurement, construction and services company.

"It is fundamental to safeguard and continue to develop the strong expertise which has been established over decades in several of Kvaerner's businesses, for example at the specialised facilities at Stord and in Verdal, which we have invested in during the last years in order to increase their long term competitiveness. We will focus on increasing shareholder value and on industrial opportunities which will enable further growth of the company" concludes Langøy.

Greenhill & Co. International LLP have been retained by the company to advise on evaluating all strategic alternatives.  

Kvaerner adds that if the process results in recommending significant changes to its current strategy, business model or ownership, this will be presented to relevant governing bodies. Support from Aker Kvaerner Holding (AKH) will be required if a recommendation from the Kvaerner board would imply a change in AKH's ownership in Kvaerner, or a decision which requires 2/3 majority vote at Kvaerner's General Meeting.