Share Purchase Agreement Between Aker and Jacobs

Source: www.gulfoilandgas.com 12/22/2010, Location: Europe

Aker Solutions has entered into a share purchase agreement (SPA) whereby it has agreed to transfer operations within its Process and Construction business area to Jacobs Engineering Group Inc. (Jacobs), one of the world's largest and most diverse providers of professional technical services. The transfer does not include the US EPC centre in Houston, and the Union Construction business located in the US and Canada, which will all be part of the new Aker Contractors company*. The transaction will allow the Process and Construction businesses included in the transfer to continue to grow under the new ownership. Aker Solutions will further concentrate its strategic efforts on its core oil and gas business.

The transaction value is estimated to be approximately NOK 5.5 billion (USD 913 million), subject to closing adjustments. The consideration will be settled in cash at completion. Completion of the transaction will be subject to relevant merger control clearances. The parties expect to complete the transaction during the first quarter of 2011.

For Aker Solutions, the transaction is expected to have a positive net cash effect of approximately NOK 3.8 billion (USD 634 million), and a cash to treasury effect of approximately NOK 4.2 billion (USD 701 million). Net gain for Aker Solutions compared to book value of the businesses is estimated to be a total of NOK 2.4 billion (USD 400 million). Aker Solutions will continue to operate the Process and Construction business area operations included under the SPA until the transaction has been completed.

Oyvind Eriksen, executive chairman, Aker Solutions said: "In August, Aker Solutions announced the decision to separate the P&C business area from the Aker Solutions Group. Since then, we have explored alternative methods of separation, including an IPO and public listing. As the alternatives matured over the recent weeks, a sale to Jacobs evolved as the preferred solution industrially as well as financially."

"This transaction provides a very good outcome for all parties - these businesses fit well with Jacobs and support their company's ambitions for continued strong growth amongst its market segments, particularly in the energy & environmental; mining & metals; and onshore downstream process markets served by P&C.

"For Aker Solutions, this represents a further step in becoming much more streamlined and focused on our core oil and gas activities going forward. With the sale of these businesses to Jacobs and our recent decision to transfer the Union Construction and EPC Centre US operations to the new Aker Contractors company, Aker Solutions' P&C business area will be dissolved. The future Aker Solutions will be a fully-fledged provider of engineering, technologies, solutions and services for the upstream oil and gas industry," added Eriksen.

Union Construction and EPC Centre US have had revenues of approx NOK 4-5 billion per year in 2007-2009 and an average NOK 150 million profits (EBITDA). Their EPC project competence is an important and valuable part of Aker Contractors' total offer to customers in the oil and gas sector, particularly in the US.

Gary Mandel, executive vice president, Aker Solutions' Process and Construction business area, who will be following the P&C business into Jacobs, commented: "Over the last few years, our Process and Construction business area has continued to rebuild, diversify and develop into a leading global project execution specialist providing engineering, procurement, construction and other services in our three onshore industry segments: Mining & Metals, Energy & Environmental, and onshore Oil, Gas and Process. Through Jacobs we will have access to a much wider global resource base and technical competencies enabling us to enhance our delivery model and service offerings to our customers."

Aker Solutions has approximately 30 000 skilled and dedicated people (including contract and craft personnel) serving the international oil, gas, energy and process industries. Of these the Process and Construction operations transferring to Jacobs include approximately 4 500 (as at 30 November 2010, this includes contract and craft personnel) employees located across operations in the UK, The Netherlands, Germany, USA, Canada, Peru, Chile, Australia, China and South Africa.

Jacobs President and Chief Executive Officer, Craig Martin, said: "We see this acquisition as benefiting the ongoing business of both organisations and supporting Jacobs' strategy for growth. It fits well, and there are clear opportunities for increased market share in the core markets we serve. The deal leverages our combined offerings and competencies - with expanded business lines, a broader technical base and increased geographic accessibility for customers."

As part of a range of transitional services being provided in this transaction, Aker Advantage will continue to provide recruitment services to the P&C operations for a specified period of time.

Aker Solutions will provide tail insurance cover for the divested businesses which will cover professional indemnity and third party/general liability occurring through the fifth year after completion within financial limits agreed with Jacobs in the SPA. Part of the risk insured will be covered by Aker Solutions, and part by external insurance markets.

The acquisition is subject to the relevant regulatory approvals and the parties aim to complete the transaction in the first quarter of 2011.

Aker Solutions ASA's advisors for this transaction have been UBS (financial) and BAHR/Slaughter and May (legal).

As previously announced by Aker Solutions on 9 December 2010, the US EPC centre in Houston, and the Union Construction business located in the US and Canada, are transferring to the new Aker Contractors company, when established, to further ramp up the company's already strong engineering, procurement and construction (EPC) competence and global capacity. Core capability of the EPC centre includes experience in both onshore and offshore oil, gas & process facilities, including: studies, FEEDs, basic and detailed engineering for topsides, gravity-based structure (GBS) integration, floating structures, LNG, gasification and complete upstream and downstream process plants. This expertise complements well that of Aker Contractors and will strengthen the EPC capability of the new company even further.

Aker Solutions is also maintaining its presence in Saudi Arabia, through its operation in Al-Khobar.

These operations are therefore not included in the transaction with Jacobs.


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