Neptune signs LOI to acquire UK based Subsea Engineering Services
Posted on 17.07.2008 - 09:00 EDT in ACQUISITION/MERGER NEWS by Rons_ROV_Links
Leading engineering services company, Neptune Marine Services today announced it had signed a letter of intent (LOI) for the acquisition of Aberdeen-based Subsea Engineering Services Limited ("SES"), a specialist provider of subsea consultancy and project engineering services to the global oil and gas industry.
Under the terms of the agreement Neptune proposes an initial payment of £5.0 million (AUD$10.29 million) with the added consideration of a three year earn out period based on EBIT performance. The acquisition is subject to Neptune obtaining necessary finance. SES generates annual revenue of £4.5 million (AUD$9.26 million) and EBIT of £1.14 million (AUD$2.34 million). Upon completion, SES will make an immediate contribution to Neptune's earnings per share.
Under the terms of the acquisition, SES Directors Allister Fraser and Hugh Parker, the senior management team and all full time employees will remain with the business to help drive its future growth and development. Managing Director and CEO of Neptune Marine, Christian Lange, said the acquisition of SES would expand the group's subsea capabilities and build on the successful integration of Neptune Ross Deeptech to provide significant growth opportunities in the resurgent North Sea region.
"Neptune Ross Deeptech has proven to be an excellent business and is growing its earnings and revenues. The addition of SES will provide Neptune with greater market presence and the opportunity to capitalise on the $40+billion in subsea expenditure that is forecast for the European market over the next four years," he suggested. "In addition, SES will provide the Neptune group with advanced technical capabilities in the design of specialist subsea equipment. These niche capabilities will be leveraged across the business and will further enhance our global service offering, particularly when coupled with the expertise of Neptune Ross Deeptech."
SES has established long term partnerships with some of the world's leading energy companies including BP, Shell, Petronas, Woodside, Total and Petro Canada. The company's reputation as a provider of quality, innovative and flexible subsea solutions complements Neptune's business strategy of acquiring assets, technologies and expertise that add value to its unique integrated subsea services model. The acquisition would also boost Neptune's presence in Aberdeen to more than 120 professionals, would add to its blue chip customer base and expand its range of services and skills available to the industry."This would help us to secure projects of greater value and scope such as those we are now experiencing in Australia," Mr Lange said.
"Neptune continues to experience very high levels of organic growth as witnessed by the additional $20 million of new projects and contract extensions that we have secured in the past month alone. In the current climate of favourable market conditions and encouraging expenditure forecasts across the global oil and gas industry, we are now poised to advance the group into the next stage of strategic development." The acquisition of SES is subject to the completion of satisfactory due diligence and contractual documentation, as well as compliance with relevant United Kingdom laws.