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4-Traders Homepage  >  Equities  >  Oslo Bors  >  Kongsberg Gruppen AS    KOG   NO0003043309

KONGSBERG GRUPPEN AS (KOG)
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Kongsberg Gruppen : has entered into agreement to acquire Rolls-Royce Commercial Marine

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07/06/2018 | 07:03am CEST

Kongsberg Gruppen ASA (KONGSBERG) today entered into agreement with Rolls-Royce plc to acquire Rolls-Royce Commercial Marine, a world leading technology business within maritime operations. The acquisition will strengthen KONGSBERG's competitiveness in a global maritime industry. KONGSBERG and Rolls-Royce Commercial Marine are by and large complementary in terms of products, solutions and competencies and the acquisition is in line with KONGSBERG's ambitions of profitable growth as a global leading technology provider.

The transaction is structured as an acquisition by KONGSBERG of the marine products, systems and aftermarket services businesses carried out by subsidiaries of Rolls-Royce plc. The transaction does not include Bergen Engines nor Rolls-Royce's Naval Business.

The parties have agreed a value for Rolls-Royce Commercial Marine of GBP 500 million (on a cash and debt free basis and with working capital at an agreed level). 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 maritime industry has over the last years experienced demanding market conditions and even though there is still uncertainty we expect the market to be facing growth with technology and innovation being key drivers. For more than 200 years KONGSBERG has been a pioneer for high technology industrial development with a long term perspective. The acquisition of Rolls-Royce Commercial Marine is in line with our growth ambitions", says Eivind Reiten, Chair of the Board of KONGSBERG.

"The acquisition of Rolls-Royce Commercial Marine makes us a more complete supplier to the maritime industry. The maritime industry is becoming increasingly globalized and is undergoing considerable technological and market driven changes. With this acquisition we will strengthening our strategic position with shipowners, shipyards and other customers and partners", says Geir Håøy, CEO and President of KONGSBERG.

KONGSBERG 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 (2017), whilst KONGSBERG has approximately 7,000 employees and a turnover of NOK 14.5 billion (2017). Combined, the companies have equipment and deliveries associated to around 30,000 vessels worldwide, and the installed base and the global presence strengthens an already world leading position with a considerable aftermarket.

Key financial figures and other information regarding Rolls-Royce Commercial Marine is attached hereto as "Appendix 1".

"The acquisition strengthens our global presence and will give increased sales and service volumes. KONGSBERG is a world leader within automation, navigation and control systems, whilst Rolls-Royce Commercial Marine is complementary with its deliveries of propellers, propulsion systems, handling systems and ship design. Both companies hold leading positions within digitalization, ship intelligence and concepts for autonomy. By bringing together this we are positioning us as a significant strategic supplier of complete solutions for the future maritime industry", says Håøy.

"This deal is good news for Rolls-Royce and KONGSBERG and comes at a time when the maritime industry is at the dawn of a new and exciting era where digital and electrical technologies will transform shipping. Rolls-Royce has been responsible for leading many of those technological advancements, and with combination of great people, market leading technology and a desire by KONGSBERG to take this business to the next level, I'm sure that this business will prosper in the years to come", says Mikael Makinen, Rolls-Royce President, Commercial Marine.

Rolls-Royce Commercial Marine has experienced considerable reductions in activity levels due 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. The acquisition will also strengthen Norwegian ownership in the world leading Norwegian maritime cluster, whilst the company will have a stronger Nordic and international position.

Financing of the acquisition KONGSBERG will finance the acquisition of Rolls-Royce Commercial Marine through a combination of new equity and a new bond loan. The purchase price will be paid in cash upon completion of the transaction.

The new equity will be raised through an underwritten rights issue of NOK 5.0 billion. The share capital increase is conditional upon approval by the 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 Parliament 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.

Shareholders now representing 19.7% of the shares have undertaken to vote in favour of the rights issue at the KONGSBERG general meeting. Together with the state, these shareholders represent 69.7% of the shares in the Company.

KONGSBERG is planning to issue a new bond loan. Nordea Bank AB (publ) filial i Norge has undertaken to provide a bridge loan in the event that the bond loan has not been issued prior to completion of the acquisition of Rolls-Royce Commercial Marine.

Condition and timetable The completion of the acquisition of Rolls-Royce Commercial Marine is subject to clearance by regulatory authorities in several jurisdictions.

KONGSBERG will publish an information memorandum with further information regarding the acquisition of Rolls-Royce Commercial Marine within 30 business days.

The rights issue is expected to take place in the fourth quarter of 2018, and KONGSBERG will issue a rights issue prospectus prior to the subscription period for the rights issue.

Subject to such regulatory clearance, the acquisition of Rolls-Royce Commercial Marine is expected to be completed in first quarter of 2019.

Invitation to investor and analyst presentation in Oslo An investor and analyst presentation will be held by KONGSBERG's CEO and Chief Financial Officer at 09:00 CET today at meeting room "Aker" in Vika Atrium, Munkedamsveien 45, Oslo. The press is welcome. The presentation can also be viewed live via webcast at: www.kongsberg.com/en/kog/investorrelations

Invitation to information meeting in Ålesund An information meeting will be held by leader of Kongsberg Maritime at 11:30 CET today at Norsk Maritimt Kompetansesenter, Ålesund. The press is also welcome.

Advisors

Arctic Securities is acting as financial advisor. Thommessen is acting as legal advisor. Arkwright and PWC is acting as due diligence advisor to KONGSBERG.

For further information, please contact:
Ronny Lie, VP Corporate Communication, Kongsberg Gruppen ASA, Tel.: (+47) 916 10
798. 
Jan Erik Hoff, VP Investor Relations, Kongsberg Gruppen ASA, Tel.: (+47) 991 11
916.

KONGSBERG (OSE-ticker: KOG) is an international, knowledge-based group delivering high technology systems and solutions to clients within the oil and gas industry, merchant marine, defence and aerospace. KONGSBERG has 7 000 employees located in more than 25 countries and total revenues of NOK 14.5 billion in 2017. Follow us on Twitter: @kongsbergasa.

This detailed announcement has been prepared and published in accordance with section 3.4 of the Continuing Obligations for Stock Exchange Listed Companies. This information is subject to disclosure requirements pursuant to §5-12 of the Norwegian Securities Trading Act.

This announcement is not an offer for sale of securities in the United States or any other country. The securities referred to herein have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be sold in the United States absent registration or pursuant to an exemption from registration under the U.S. Securities Act. The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Any offering of securities will be made by means of a prospectus that may be obtained from the Company when the subscription period commences and that will contain detailed information about the Company and management, as well as financial statements. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures.

In any EEA Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any member State, the "Prospectus Directive"), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.

This announcement is only directed at (a) persons who are outside the United Kingdom; or (b) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (c) persons falling within Article 49(2)(a) to (d) of the Order; or (d) persons to whom any invitation or inducement to engage in investment activity can be communicated in circumstances where Section 21(1) of the Financial Services and Markets Act 2000 does not apply.

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to) forecasts, projections and estimates, statements of management's plans, objectives and strategies for the Company, such as planned expansions, investments or other projects, management, as well as statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements. Although KONGSBERG believes that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. No assurance can be given that such expectations will prove to have been correct. KONGSBERG disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Click here for more information: http://www.newsweb.no/index.jsp?messageId=455196

© Oslo Bors ASA, source Oslo Stock Exchange

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Financials (NOK)
Sales 2018 14 597 M
EBIT 2018 1 120 M
Net income 2018 804 M
Debt 2018 237 M
Yield 2018 2,23%
P/E ratio 2018 25,00
P/E ratio 2019 16,31
EV / Sales 2018 1,39x
EV / Sales 2019 1,16x
Capitalization 20 098 M
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Mean consensus OUTPERFORM
Number of Analysts 6
Average target price 191  NOK
Spread / Average Target 13%
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Managers
NameTitle
Geir Håøy President & Chief Executive Officer
Eivind Kristofer Reiten Chairman
Gyrid Skalleberg Ingerø Chief Financial Officer & Executive Vice President
Helge Lintvedt Director
Irene Waage Basili Deputy Chairman
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