Kvaerner buys Trafalgar for pounds 904m deal
Tuesday 05 March 1996
Norwegian engineering group Kvaerner yesterday reached a pounds 904m agreed takeover of Trafalgar House, whose luxury Cunard shipping line is likely to be sold as part of a pounds 750m disposal plan.
Kvaerner's bid of 50p per ordinary share, and 80p for the preference shares brings to an end Hongkong Land's disastrous five-year investment in Trafalgar which has cost it several hundred million pounds.
Hongkong Land, owned by the Jardine Matheson empire, has agreed to sell its 26 per cent stake, a move which will be influential when other shareholders consider whether to accept the offer.
Hongkong Land will receive pounds 224m under the deal, but analysts believe its investment has cost it at least double that figure, including backing two rights issues in recent years.
Simon Keswick, chairman of Trafalgar, said: "The offer by Kvaerner for Trafalgar House represent an excellent opportunity for realising value for Trafalgar House's shareholders."
Kvaerner's president and chief executive Erik Tonseth said the deal would be partly funded by a disposal programme of non-core assets. About pounds 250m worth of sales have already been signed by Trafalgar, including the Ritz hotel and housebuilder Ideal Homes, and Mr Tonseth estimates the remaining assets will fetch another pounds 750m.
Cunard, pride of Britain's merchant and owner of the QE2, is almost certain to be sold. Mr Tonseth said: "In my opinion, Cunard falls outside our core criteria and we will address it accordingly." Cunard, which last September had a book value in the Trafalgar accounts of pounds 294m, is now thought to be worth little more than pounds 200m. P&0, Walt Disney, and Carnival Cruises are among some of the liner operators talking to Kvaerner about buying Cunard, which was last year hit by a row when it set-sea before completing a re-fit.
Kvaerner, is also likely so sell its stake in British construction company Amec, which was built up during an abortive pounds 320m takeover attempt last year, and possibly Trafalgar's remaining US housebuilding interests. Kvaerner said it was not under pressure for fire sales.
Mr Tonseth said it would take until at least 1997/98 to restore Trafalgar to satisfactory profitability. The troubled UK company made a 1995 pre- tax loss of pounds 321m and has debts of pounds 229m.
Kvaerner wants to internationalise its oil and gas operations, particularly in Asia, and was keen to take over a company with strong project management experience.
Mr Tonseth said: "We believe that the skills and technologies of Trafalgar House and Kvaerner will substantially enhance the prospects for the combined businesses and will create one of the most powerful engineering companies outside the US."
Kvaerner only has a market capitalisation of pounds 900m, but it is Europe's largest shipbuilder and a major offshore oil industry engineering company.
Mr Tonseth has made little secret of the fact he is only interested in Trafalgar's core engineering and construction businesses, including Davy and John Brown.
He had originally begun negotiations for these businesses, but Trafalgar said it would only accept a bid for the whole company. Mr Tonseth said: "Sometimes when you want to go somewhere, you have to make a detour and in a way we are making a detour."
The Jardine group had targeted Trafalgar as a way to reduce its exposure to Hong Kong and the commercial threats from the Chinese takeover. Hongkong Land said it planned to use the funds raised from its stake in Trafalgar on Asian investments.
Mr Tonseth said the takeover will cause few job losses and will result in a shift in Kvaerner's centre of gravity from Norway to London, though the group's HQ will remain in Oslo. Kvaerner had already moved its subsea operations to the UK.
He said: "If this acquisition goes through we will have a very substantial presence in the UK and this will have an impact on the way Kvaerner carries out its operations."
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 3 Lego breaks out of the toy box and heads for the gallery
- 4 Julian Assange and Edward Snowden join piracy mogul Kim Dotcom’s political campaign in New Zealand
- 5 Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
Jihadi John': MI5 may have identified Isis militant who killed David Haines but options limited
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: Police will be on high alert on Friday whatever the result
David Haines beheading: David Cameron says Britain will hunt down Isis 'monsters' shown in video murdering aid worker
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...