Bloomberg News

Norway Billionaire Roekke Seeks Takeovers After Aker Revamp

June 22, 2011

(Updates with comment on evaluation of targets in ninth paragraph.)

June 22 (Bloomberg) -- Billionaire Kjell Inge Roekke’s Aker ASA, which controls Norway’s largest maker of oil platforms and its second-biggest crude explorer, anticipates growing through acquisitions while expanding in Asia and Africa.

“We are basically not present in the Middle East,” Oeyvind Eriksen, 47, the chief executive officer of the Aker holding company and Aker Solutions ASA, said in a June 20 interview in Oslo. “We have a very fragmented presence in Asia Pacific and we lack local content in West Africa to participate in the next expected upturn cycle for subsea equipment.”

Surging oil prices and dwindling output from areas such as the North Sea has spurred a boom in exploration in new areas off Africa, South America and Asia. Companies will increase global spending on exploration and production 11 percent this year to $490 billion, Barclays Plc estimated in December. There have been deals of about $85.4 billion in energy mergers and acquisitions this year, more than any other industry, Bloomberg data shows.

Eriksen is completing a one-year restructuring of Aker Solutions, Norway’s largest engineering company, which has included selling and separating assets. The company is “basically debt free,” which will allow it to seek acquisitions to strengthen its technology portfolio and distribution network outside Norway, he said.

Norway Growth

Aker, the holding company, fell 0.5 krone to 139.5 kroner as of 11:37 a.m. in Oslo. The shares are down 0.7 percent this year, valuing the company at 10 billion kroner ($1.8 billion). Aker Solutions fell 1 percent to 107 kroner.

Companies such as Statoil ASA and Roekke’s Aker companies are seeking to expand outside Norway, where oil production has halved over the past decade as North Sea fields dry up. At the same time, producers are increasing spending offshore the Nordic country to raise recovery rates and drilling more wells in the Arctic to tap new resources. Petroleum investments are forecast to rise 15 percent to a record $27 billion in Norway this year, according to Statistics Norway.

‘Pretty High’

Rising prices for oil-service assets is “probably what will limit how we will proceed,” said Eriksen, sitting in his office overlooking the fjord of Oslo. “Prices on oil services companies have been pretty high recently. Short-term we need to be disciplined in order to avoid mistakes.”

Aker Solutions gained 2.8 billion kroner ($508 million) from the sale of its process & construction business to Jacob Engineering Group Inc. and subsidiary Aker Marine Contractors to Ezra Holdings Ltd. It has also separated its engineering, procurement and construction unit, which it aims to list in July in Oslo as Kvaerner ASA.

“It’s not only a question of how to price the target company,” Eriksen said. “When we calculate the return on the investment, we also look into how we can take advantage of the target company within other business areas of Aker Solutions and increase the sales activity via the new platform. That might be a slightly different calculation.”

The 52-year-old Roekke is Norway’s 10th richest man, according to magazine Kapital. He started working on a fishing trawler when he was 17, before moving to Alaska where he bought his own vessel at the age of 23. In 1996, he gained control of Aker, a 170-year-old industrial company, and became majority- shareholder in engineering company Kvaerner in 2002, which later became Aker Solutions. Roekke owns 67 percent of Aker.

Seafood, Oil

Roekke brought Eriksen to Aker in 2009 and began restructuring the group, including merging Aker Exploration with Det Norske Oljeselskap ASA to form the second-biggest crude explorer offshore Norway. They also arranged the sale of assets from Aker Holding AS to Aker Solutions. The deal stirred up a dispute between Roekke and the government, which is part owner in Aker Solutions through Aker Holding, amid concern the transaction was overpriced. Eriksen said Aker wouldn’t engage in sales within the group again.

“We’ve completed the main restructuring, the main disposals, and now it’s about how to take advantage of the new structure,” he said. “Going forward it’s about how each individual company can develop itself in its respective markets, including how we can identify acquisition targets as part of the plan to grow.”

Relisted Driller

Aker will grow within the “typical Norwegian sectors” of oil and gas, seafood, marine biotechnology, environmental technology and asset management, he said. The executive said he was most positive on energy and seafood.

Aker also relisted its rig company Aker Drilling in Oslo in February, three years after taking it off the exchange to avoid a takeover by billionaire John Fredriksen’s Seadrill Ltd.

Eriksen said he was bullish on demand for new harsh environment and deepwater rigs, notably in Norway, where the average age of the current fleet is 18 years and more than a third are more than 25-years-old.

Higher exploration budgets and greater demand for modern rigs and rigs capable of operating in deepwater and harsh environments has spurred a boom in new rig orders. Orders for ultra-deepwater units have risen to 31 since November, while the number of jack-up rigs on order has climbed to 40 since October, Seadrill said May 27.

Aker Drilling has “invited basically all drillers that may have an interest” in consolidation talks, Eriksen said. “We sincerely think that it will happen.”

“We have positioned Aker Drilling as a pure-play deepwater harsh environment. If we should consider some kind of consolidation, to us the most attractive players will be drillers with a similar position or ambition,” he said.

Seadrill, the owner of the world’s second-largest fleet of deepwater rigs, considers Aker Drilling among potential acquisition candidates, CEO Alf Thorkildsen said in an interview on Feb. 24. While the two companies were in talks to merge at the beginning of the year, they couldn’t agree on terms, Eriksen said. He declined to comment on whether the company was currently in merger discussions.

Aker’s industrial holdings also include Aker Clean Carbon ASA, and Aker BioMarine ASA.

--Editors: Jonas Bergman, Kim McLaughlin

To contact the reporters on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net; Meera Bhatia at mbhatia2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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