National Oilwell Varco, Inc. (NOV) announced plans to buy Denmark based NKT Flexibles I/S (“NKT”). For the acquisition, National Oilwell will shell out approximately $670 million or 3.8 billion Danish Kroner in cash.
Danish company NKT Holding and Norwegian firm Subsea 7 S.A., having a respective interest of 51% and 49%, formed NKT Flexibles that designs and produces flexible pipe products and systems for the offshore oil and gas industry.
NKT Flexibles also manufactures products related to the Floating Production, Storage and Offloading vessels (“FPSO’s”) and other offshore vessels, plus subsea production systems including flow-lines and flexible risers. Recently, the company entered into a deal with Petroleo Brasileiro S.A. (PBR), or Petrobras S.A. to set up a new unit in Brazil.
Following the acquisition, National Oilwell will benefit from NKT Flexibles’ advanced technical design capability and skilled manpower. The collaboration will also expand National Oilwell’s global foothold by venturing into the developing sectors of the energy industry.
With this deal, National Oilwell intends to sell about $150 million in equipment to FPSO, up from the earlier level of $120 million to $130 million.
The transaction, pending customary regulations and approvals, is slated for a first half 2012 closure.
Houston, Texas based National Oilwell is a world leader in the design, manufacture, and sale of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide.
Last week, the company reported better-than-expected fourth quarter 2011 results. Earnings per share (excluding transaction charges) came in at $1.37, comfortably above the Zacks Consensus Estimate of $1.30 and the year-ago profit of $1.05. Quarterly revenue rose 34.3% year over year – from $3,172.0 million to $4,259.0 million – and was 6.4% above our projection.
National Oilwell’s performance was aided by robust activity levels across all business segments and benefits from the Ameron acquisition.
We expect the company to perform in line with the broader industry over the next few months and maintain our long-term Neutral recommendation. National Oilwellcurrently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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