Billionaire Kjell Inge Rokke is transforming the structure of his business empire as he seeks to revive struggling oil-service firms and seize on opportunities in renewable energy.
Rokke’s investment company Aker ASA plans to combine its two biggest oil-industry suppliers, engineering firm Aker Solutions ASA and platform builder Kvaerner ASA, while spinning off Aker Solutions’s offshore-wind and carbon-capture businesses into two new companies that will form a new renewable-energy hub.
The oil-service providers surged in Oslo trading after the plans were presented on Friday. Aker Solutions rose as much as 37%, the most in almost four months, and Kvaerner as much as 19%.
The proposed transformation of the Aker group comes as the oil industry, and especially its suppliers, faces a deep crisis due to the coronavirus pandemic and the longer-term prospects of falling demand for fossil fuels as the world adapts to climate change.
“At a time when renewables have developed from niche technologies to global industries, Aker’s ambitions exceed the announced spin-offs in Aker Solutions,” Aker Chief Executive Officer Oyvind Eriksen said in a statement. “We take an active role to position ourselves in a broader and rapidly growing renewable energy industry.”
Aker is also proposing to acquire wind developer NBT AS at an implied equity value of 3.1 billion kroner ($333 million) in order to boost its new renewable energy group, called Aker Horizons. Horizons will be led by Kristian Rokke, Kjell Inge’s son, who has held several leading positions in Aker companies earlier.
The two spin-offs that will come under its umbrella, Aker Offshore Wind and Aker Carbon Capture, will both be listed on the Merkur Market in Oslo. Their funding will be guaranteed through two private placements, Aker said.
Aker Solutions had already ventured into renewable energy in recent years, both by offering engineering for offshore wind projects and taking actual ownership in some projects. The new combined company will continue to offer services to the renewable energy industry, it said.
The exact exchange ratio in Aker Solutions’s absorption of Kvaerner remains to be determined, but Kvaerner shareholders will get an ownership of between 43% and 53% in the new company.
Aker Solutions will appoint Kjetel Digre as CEO. Digre, who starts on Aug. 1, is currently in charge of operations and asset development at Aker BP ASA, Aker’s oil company and biggest holding.
The combined company will have about 15,000 employees, down from almost 19,000 at the start of the year. The two companies have already started reducing capacity amid the Covid-19 crisis, and have a target of reducing fixed costs by 1.5 billion kroner annually by 2021, Aker Solutions said.
While the spin-off companies are expected to be listed as soon as August, the merger is subject to the approval of Aker Solutions and Kvaerner shareholder meetings in September.
The Norwegian government, a major owner of both companies through its 30% stake in Aker Kvaerner Holding AS, supports the transactions, though it isn’t planning to participate in the private placements, the Trade Ministry said in a separate statement. Aker Kvaerner Holding will be dissolved, said Aker, which owns the remaining 70%.