Major Norwegian engineering company Aker Solutions will be divided into two businesses in a move hoped to make the company more competitive. The subsea, umbilicals, engineering and maintenance, modifications and operations areas will form a new company under the name of Aker Solutions, while other areas will be incorporated into an oil services investment company, Akastor.
“The new Aker Solutions will be a leaner and more focused company that will be able to offer customers the unique and cost-effective technology and design they need to succeed,” Executive Chairman Øyvind Eriksen said in a press release on Wednesday. The move is meant to strengthen the company’s market position, and make returns more predictable.
It’s hoped narrowing Aker Solutions’ focus will help it cut costs and improve its performance in deepwater and subsea oil-services markets. Meanwhile, the other units including drilling technologies, oilfield services, process systems, surface products and business solutions will have more strategic freedom under Akastor. Each area will operate largely independently with its own management and board of directors.
“We are taking a major step in a transformation that began 12 years ago with the merger of Kværner and Aker Maritime,” said Eriksen. “After this transaction and the 2011 Kværner spin-off, we will have created three distinct companies to service the global energy industry, providing offshore construction, unique subsea technology and field design and oilfield services. We have also divested NOK 12 billion (USD 2 billion) in assets as part of the process.”
Regional president in Brazil, Luis Araujo, will become the new Aker Solutions chief executive officer. Frank Ove Reite, managing partner at Aker ASA’s ownership and advisory company Converto, will become Akastor’s CEO. Current chief executive Eriksen will become chairman of the Aker Solutions board. Leif Borge, chief financial officer of Aker Solutions, will be CFO of Akastor. The head of subsea finance, Svein Oskar Stoknes, will become the new Aker Solutions CFO.
“While I will continue to play an active role as chairman, it is time for new leadership to take these companies forward,” Eriksen said in the release. “Luis has proved more than capable in managing our expansion in Brazil and will provide inspired leadership as the new Aker Solutions builds on its success in the subsea and deepwater markets. Frank has a long experience within the Aker group and is excellent at developing businesses and pushing them toward their full potential.”
Both companies will be listed on the Oslo stock exchange when the split takes place in September. Aker Solutions’ largest shareholders, Aker Kværner Holding and Aker ASA, have approved the division and will discuss it further at an extraordinary general meeting in August. Shareholders will get one share in the new Aker Solutions for each share they held in the old company, and also keep their shares in the existing business once its rebranded as Akastor.
Newspaper Dagens Næringsliv reported the transaction also has the support of the Ministry of Trade and Industries (Næringsdepartementet).