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KONGSBERG adds Rolls-Royce Marine

KONGSBERG Gruppen ASA has entered into agreement to acquire Rolls-Royce Commercial Marine.

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KONGSBERG CEO Geir Håøy (right) and Tristan Halford-Maw, Deputy Director, M&A Rolls-Royce
KONGSBERG CEO Geir Håøy (right) and Tristan Halford-Maw, Deputy Director, M&A Rolls-Royce

The deal was announced by KONGSBERG and Rolls-Royce plc, which has been trying to sell its maritime technology business Rolls-Royce Commercial Marine for some time.


“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,” KONGSBERG said. It does not include Bergen Engines nor Rolls-Royce’s Naval Business.

 

The agreed value for Rolls-Royce Commercial Marine is GBP 500M (on a cash and debt free basis and with working capital at an agreed level), with the final purchase price to be determined at completion.


“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”, said 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”, added Geir Håøy, CEO and President of KONGSBERG.


Both KONGSBERG and Rolls_Royce were working on autonomous shipping projects. Together with global towage operator Svitzer, Rolls-Royce successfully demonstrated the world’s first remotely operated commercial vessel in Copenhagen harbour, Denmark, last year. A month earlier, Norwegian Chemical company Yara International ASA and KONGSBERG announced the development of the YARA BIRKELAND, the “world’s first fully electric and autonomous container ship, with zero emissions”. There is clearly scope to combine this work, and both companies were part of the Norwegian Forum for Autonomous Ships (NFAS).


The deal will boost KONGSBERG considerably. “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,” KONGSBERG noted.


“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”, said 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”, added Mikael Makinen, Rolls-Royce President, Commercial Marine.


KONGSBERG will finance the acquisition through a combination of new equity (through a rights issue) and a new bond loan, which needs approval from the Norwegian Government. It also needs regulatory approval in several jurisdictions and is expected to be completed in Q1 2019.

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