DOF Group has struck an agreement to take over Maersk Supply Service for $1.1bn in cash and new shares.
The deal marks a major shift for DOF, which had been a takeover target for vocal offshore consolidator Kristian Siem and has changed from being the hunted to becoming the hunter.
It will now have Robert Maersk Uggla, John Fredriksen, Arne Blystad and Siem among its notable shareholders.
With the deal, DOF intends “to further enhance its position as a major integrated offshore services provider”, according to a statement on Tuesday.
Chief executive Mons Aase said: “The announced transaction today marks a strategic milestone for the DOF Group, driven by a strong industry rationale and a shared vision with AP Moller Holding, who will indirectly become a major shareholder.
“Under the DOF name and brand, we will create a leading offshore services provider and strengthen the global position of the combined company.”
Maersk Supply will hold 25% of DOF after the transaction. Fredriksen will remain a large shareholder on a roster that includes Magnus Roth.
Aase said the combined company would have the world’s largest fleet of construction support vessels and high-end anchor-handling tug supply units.
The two companies’ current operations are strategically and geographically complementary, and future growth ambitions are strongly aligned, DOF said.
Maersk Supply was the last of AP Moller-Maersk’s energy businesses to be split off from the Danish giant as part of its strategy pivot in the past decade under the chairmanship of Uggla. Until now, it was kept in family hands after being sold by the public company.
Martin Larsen, chief financial officer at AP Moller Holding and chair of Maersk Supply, said: “The combined company is committed to keeping a solid footprint in Denmark.
“As the largest shareholder in the combined company, AP Moller Holding will remain an engaged owner, ensuring the combined company’s continued development.
“Drawing on our long-standing position in the offshore industry, combined with our ambition to contribute to the shift to green energy, we have separated Maersk Supply Services’ offshore wind installation business into an independent unit.
“By doing so, we aim to accelerate the implementation of its innovative installation concept that meets the industry’s need for faster installation process.”
DOF will be one of the largest oil services companies listed on the Oslo Stock Exchange, with a market cap of $2.3bn as of close on 28 June.
The acquisition is supported by the boards of Maersk Supply Service Holding (MSSH), Maersk Supply and DOF, as well as shareholders in DOF representing more than 50% of the outstanding shares.
AP Moller Holding’s subsidiary MSSH will receive a combination of $577m in cash and around 58.9m new shares in DOF, leading MSSH to hold 25% of the share capital.
The combined company will have more than 5,400 employees and 78 modern offshore/subsea vessels, 65 of which are owned, and engineering capacity to service the offshore and subsea market.
Before the closing of the transaction, certain entities, vessels, assets and liabilities will be transferred out of the Maersk Supply structure and not be acquired by DOF.
The offshore wind installation business has already been carved out of Maersk Supply. Further, the transaction does not include its operations in Brazil.
Maersk Supply will at the time of completion of the transaction own 22 high-quality subsea and anchor-handling tug supply vessels.
The deal marks a stunning turnaround for DOF, which carried out a $53m IPO in June last year after emerging from bankruptcy.
Fredriksen committed to buying $23m of shares in the IPO, giving him a stake of about 5% at that time.
Existing shareholders were wiped out in the bankruptcy and banks and bondholders took over after DOF collapsed under the weight of $2.25bn in debt.
Its assets were spun down into a new company under the continued leadership of chief executive Aase.
Before the IPO, three groups had holdings of more than 10%.
Euroclear Bank was the biggest investor on 15.66%, with Clearstream Banking on 12.26% and Eksportfinansiering Norge on 10.39%.
DOF rejected a late takeover bid by Siem-backed oil and contracting giant Subsea 7 at NOK 35 per share.
Bondholders previously had 55.55% of the company and secured lenders the rest.
Other banks involved included DNB, ABN Amro, Deutsche Bank, Danske Bank and SpareBank.
In November, the owner built capacity by chartering in the 137-loa Maersk Installer (built 2017) from Maersk Supply.
DOF intends to finance the cash portion of the purchase price through a new debt facility of $500m, to be provided by DNB, Danske Bank, Danmarks Skibskredit and Deutsche Bank.
The company also raised NOK 1.06bn in a private placement on Tuesday.
About 10.75m new shares were allocated for NOK 99 each compared with Tuesday’s closing price of NOK 98.40.
The placement was significantly oversubscribed by existing shareholders.
Fredriksen’s Geveran Trading pre-committed to subscribe for offer shares corresponding to $30m.
DOF’s board will also propose to implement a subsequent repair offering of 2m new shares, raising gross proceeds of about NOK 199m.
The subsequent offering has been fully underwritten by Geveran.
Closing of the transaction is subject to clearance by regulatory authorities and various approvals by an extraordinary general meeting of DOF that is expected to be held this month.
DOF believes the transaction will close in the fourth quarter.
Carnegie is acting as financial adviser and Advokatfirmaet Thommessen is acting as legal adviser to DOF.
In March last year, container ship giant Maersk completed a seven-year strategic shift away from energy services by agreeing a sale of Maersk Supply to its parent, AP Moller Holding, in a deal worth $685m.
Maersk adopted its new strategy of focusing on integrated logistics and container shipping in 2016, selling off Maersk Tankers, Maersk Oil & Gas and Maersk Drilling by 2019.
The group could not find a solution for Maersk Supply in tough offshore markets, however.
