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Norway: Consolidations Continue To Shape Market

The conditional agreement whereby the Ulstein Group less its shipyard will become part of Vickers, and the takeover of Kvaerner Ships Equipment (KSE) by Hamworthy Marine's parent organization, signal the start of a new era for two leading Norwegian players in the maritime sector. While its Swedish subsidiary has long been a driving force within the cargo access equipment market, KSE has pursued a policy of internationalization to the extent of having transferred its corporate headquarters from Norway to Singapore in 1996.

Following December's $57 million purchase by the diversified, U.K.-listed engineering and ports group Powell Duffryn, its future now lies in the newly-created, British-based entity, Hamworthy KSE.

Ulstein's business development has gathered momentum since flotation in October 1997, boosted by a succession of company purchases to strengthen and embellish a broad-based, international manufacturing operation, including an extended North American presence. The $500 million acquisition by niche engineering specialist Vickers will create a major new force in the global market, Vickers- Ulstein Marine, to be run from Ulsteinvik, the Norwegian company's west coast fountainhead.

Both pairings are characterized by a high degree of product and market complementarity, and both involve concerns which are successful in their own right, having demonstrated innovation as well as resilience in a fiercely competitive, international business scenario.

The KSE transaction is part of the Kvaerner Group's on-going shake-out of what it perceives as non-core activities. It is equally a testament to the will of Powell Duffryn to expand within the marine market by building on Ham worthy's operations, already much developed through selective company and technology purchases over the course of the 1990s. The impending marriage of interests between Ulstein and Vickers reflects strategic objectives of both parties. It is in line with the U.K. firm's plan to gain leading market positions in niche engineering sectors offering growth potential, and allies with Ulstein's philosophy of extending the concept of system solutions.

Subject to the completion of due diligence procedures, bank finance, and approval by the relevant U.K., Norwegian and U.S. authorities, Vickers-Ulstein Marine is expected to come into being by the spring at the latest. Ulstein chief executive Bard Mikkelsen, who will head up the new force, is unequivocal about the prospective benefits of the link-up.

"It represents a good industrial solution for the ship equipment producing companies," observed Mikkelsen. "Our strategies can be carried forward and we will get a larger marketing and service organization. Additionally, there are opportunities for synergy and technical developments. For example, together with Kamewa, part of Vickers' marine division, we can offer competitive, integrated propulsion solutions." Ulstein's main strengths are in the fields of propulsion and maneuvering systems, transmissions, steering gear, deck machinery, high-performance rudders and medium-speed diesels. It includes brands such as Ulstein Propeller, Brattvaag, Tenfjord, Frydenbo, and Ulstein Bergen, with Bird- Johnson having added fixed pitch propellers and waterjets to the group's market reach last year, while Ulstein UT-series vessel designs are licensed to yards around the world.

To a high degree, its activities are complementary to those of the U.K. group's Vickers Marine division, spanning the design and manufacture of propellers, thrusters, waterjets, winches, stabilizers, steering gear and hydrodynamic bearings. Vickers encompasses the Swedish-based Kamewa Group, including the Aquamaster and Rauma brand names from Finland, as well as Michell Bearings and motion control specialist Brown Brothers in Britain.

Both Ulstein and Vickers have interests in the turbine field, while Kamewa's joint development of podded propulsion systems in conjunction with electrical engineering specialist Cegelec gives further dimension to the projected new, combined company.

Meanwhile, the merger of KSE's liquid and dry cargo divisions with Hamworthy Marine's three main manufacturing operations has created a new force in the international market. KSE's range features liquid cargo handling systems for tankers, inert gas systems, engine room pumps and cargo access equipment for all ship types, while Hamworthy's key areas include shipboard air compressors, centrifugal pumps, waste treatment systems, Svanehoj deepwell cargo pumps, and Schilling high-lift rudders. Significantly, the takeover excluded Kvaerner Marine Automation, a Norwegian homegrown division with strengths in integrated bridge control systems, as well as Kvaerner Kincaid in Scotland and KSE's Singapore headquarters. KSE was viewed as no longer core to the Kvaerner organization's areas of engagement. Deteriorating financial results for the Kvaerner Group has seen the implementation of a critical review of the composition of activities and an assessment of long-term profit potential within each of the various business areas, covering shipbuilding, construction and engineering. Former ABB executive vice president Kjell Almskog moved into his new office on December 7 as Kvaerner president, to lead the work initiated by the board to focus and sharpen the Group's strategy.

 
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