DNV and GL Group Announce Landmark Merger

A merger of international classification superpowers has been announced today.

Norwegian classification society Det Norske Veritas (DNV) and German classification society Germanischer Lloyd have agreed to merge their respective businesses in 2013.  The new entity will be called DNV GL Group.  If approved, this merger will be responsible for classing a combined tonnage of 265 million gross tons of ships and rigs worldwide making it the largest classification society in the world, and de-throning ClassNK from the top ranking.

This merger brings a very interesting combination of expertise together.  Both companies were founded in the mid-19th century with the mission to promote “Safeguarding life, property, and the environment” with respect to maritime shipping.  Since then, both companies have expanded their operations and furthered their mission into other industrial sectors such as offshore oil and gas, renewables, and the power sectors.

DNV, with headquarters in Oslo, Norway is widely regarded for their expertise in the offshore energy sector, a talent developed while pioneering the development of harsh environment oil fields offshore Norway, and around the world, over the past few decades.  Besides the maritime and offshore oil and gas sectors, DNV has further diversified their business over the years to cover the aviation, energy, healthcare, food and beverage, IT and telecom, petrochemical and rail sectors with offices in 100 countries.

Germanischer Lloyd, headquartered in Hamburg, Germany has a strong reputation in the maritime sector, and is known for their particular expertise in the containership sector.  Through a number of acquisitions between 2004 and 2010 however, GL gained formidable strength in the offshore oil and gas sector which culminated in 2010 when they acquired London-based offshore consultancy Noble Denton.

During that same period, GL was gaining strength in the renewables sector, again through a series of acquisitions which culminated when they joined forces with Garrad Hassan making GL-Garrad Hassan the world’s largest renewable energy consultancy servicing the onshore and offshore wind, wave, tidal and solar sectors.

The new DNV GL Group will have a strengthened foothold in several areas of expertise, including the maritime segment and across the entire oil & gas value chains. The Group will be one of the global leaders in pipeline verification and asset integrity services as well as in renewable energy certification and advisory services. Moreover, it will be a strong player within power transmission and distribution as well as testing and certification services. To enhance its service offering the DNV GL Group plans to strengthen its focus on R&D and innovation.

“The merger rests on a strong strategic rationale, and responds to challenges of increased globalisation, rapid technological change and the need for sustainable development. Our customers will benefit from an increased service offering and global competence base as well as one of the densest networks,” says DNV’s Group CEO, Henrik O. Madsen, who will be the CEO of the combined new company. “The merger with DNV supports our long-term goal of being recognized as one of the most respected technical assurance and advisory companies in the world”, adds GL Group CEO, Erik van der Noordaa.

The DNV Foundation will hold 63.5 %, while GL’s owner Mayfair SE will hold 36.5 % of the shares. The new company, with a combined turnover of some EUR 2.5 billion, will be headquartered and registered in Norway.

“We see this as a good strategic match. The two companies have a common set of values and complementary strengths. Both have strong brands and solid market positions as well as a reputation for high quality and strong integrity. There were negotiations between DNV and GL both in 1999/2000 and in 2006 about closer cooperation. I am very pleased that timing now seems to be right,” says Leif-Arne Langøy, the Chairman of DNV’s Board of Directors.

“DNV is the partner of choice for GL.  Besides DNV’s clear commitment to Hamburg our decision for this partnership is based on the complementary fit of DNV and GL as well as the joint ambition for innovation and quality of both companies.  As a long-term oriented shareholder we consider this partnership to be the continuation of our successful investment in Germanischer Lloyd,” says Guenter Herz, Chairman of Mayfair SE.

I spoke with Tore Høifødt, Communications director at DNV today and he mentioned a number of issues will need to be sorted out and that this merger may take up to 6 months to finalize as approvals are gained from competition authorities.

As independent advisors to the United Nations on maritime safety for their respective countries, DNV and GL will also need to figure out how they will handle this responsibility as a combined entity.  In our phone call this morning, Mr. Høifødt mentioned, “this is one of the issues we will be working on over the coming months.”

DNV GL Group will operate in the business segments Maritime, Oil & Gas, Energy and Business Assurance. Its global headquarters will be at Høvik outside of Oslo.

The maritime business unit will be headquartered in Hamburg, Germany, while maintaining its commitment to the Norwegian maritime cluster. Oil & Gas will be headquartered at Høvik, Norway, while Energy will be headquartered in Arnhem, the Netherlands and Business Assurance in Milan, Italy. DNV GL Group will be organised as a Norwegian limited company (AS).