Schlumberger, Aker Solutions and Subsea 7 will form a joint venture to drive innovation and efficiency in subsea production by helping customers unlock reserves and reduce cycle time. The agreement will bring together a portfolio of innovative technologies such as subsea gas compression, all-electric subsea production systems and other electrification capabilities that help customers meet their decarbonization goals.
The proposed joint venture will combine Schlumberger’s and Aker Solutions’ subsea businesses, which include deep reservoir domain and engineering design expertise, an extensive field-proven subsea production and processing technology portfolio, world-class manufacturing scale and capabilities, and a comprehensive suite of life-of-field solutions for customers all over the world. Subsea 7 will be an equity partner in the new joint venture.
Schlumberger will hold 70% of the JV, Aker Solutions 20% and Subsea 7 10%.
The transactions are interdependent and subject to regulatory approvals, as well as other customary closing conditions, and are expected to close during the second half 2023.
Aker Solutions will receive US$700 million in consideration for the sale of a 20% ownership in the JV and retain a 20% ownership in the JV as follows:
US$306.5 million in proceeds from Schlumberger which will be settled in the form of shares in Schlumberger. The shares will be settled based on the volume weighted average price for the ten trading days ending on the fifth trading day preceding closing of the transaction and is subject to a lock-up period of minimum 180 days.
US$306.5 million in proceeds from 10% divestment to Subsea 7 which will be settled in cash. US$153 million of these will be settled at closing and the remaining US$153.5 million will be settled, with interest, at the latest on 30 June 2024.
US$87.5 million in proceeds from a vendor note from the JV to be paid, with interest, to Aker Solutions with minimum 50% one year from closing and the remainder within two years from closing.
Subsea Integration Alliance, currently an unincorporated alliance between Schlumberger and Subsea 7, will continue between the JV and Subsea 7. The alliance will be extended by 10 years from the closing date of the transaction.
The Board of Directors of the JV will consist of three representatives from Schlumberger, two from Aker Solutions and one from Subsea 7.
The combined business will have approximately 9,000 highly skilled employees globally. Estimated synergy potential is more than US$100 million per annum in the medium term, and the JV will have an attractive dividend policy.
Each party will operate their businesses independently and in the normal course until closing. Based on a scenario where closing takes place in the fourth quarter of 2023, Aker Solutions will in addition to the value of the transactions retain an estimated US$300 million of cash generation from its subsea business, for the seven quarters from second quarter of 2022 until end 2023.
Aker Solutions continues to expect 2022 revenues at around NOK 38 billion (US$3.8 billion) (US$1.3 billion), of which Subsea is expected at around NOK 13 billion. Following the transactions Aker Solutions will hold 20% ownership in the subsea JV and a large and significant business comprising the EMM and Renewables & Field Development segments. This business alone is expected to deliver revenues of around NOK 25 billion (US$2.6 billion) in 2022.
Aker Solutions expects to recognize a gain of around US$1 billion following the transactions, at closing.