Norway’s leading private equity fund, Herkules Private Equity, announced Tuesday that it has entered into agreements to acquire Umoe Schat-Harding AS and Noreq AS, creating the world’s leading supplier of maritime life-saving equipment.
Herkules says that they will be reinvesting a substantial amount in a new, joint holding company, with the intention to build on both companies strong market positions through the combined company. For 2013 the companies expect total revenues of approximately NOK 1.2 billion.
Herkules Private Equity Fund III will be the principal owner of the new company and transactions are expected to be finalized the first half of July, Herkules says.
“Schat-Harding and Noreq complement each other in an excellent manner. By combining the expertise and ability to deliver of both companies, our customers will be able to rely on us even more in terms of equipment deliveries, good service and costs,” says Styrk Bekkenes, Managing Director of Noreq and the largest investor after Herkules.
The global market for life-saving equipment is currently very fragmented, Herkules said in a statement, and there is a clear need for bigger and more robust players, which the combination of Schat-Harding and Noreq will contribute to. Schat-Harding has long been a leading international player with a unique position in the North Sea offshore market and the world’s biggest service network for life-saving equipment.
In the space of a few years, Noreq has developed into a significant player with a strong international presence. Both companies have been quick to introduce products and solutions that satisfy new, more stringent safety requirements in the offshore sector, Hurkules says.
New Regulations on the Norwegian Continental Shelf
Hurkules expects that the combined company will be well prepared for new regulations for offshore lifeboats on the Norwegian Continental Shelf which are expected to enter into force from 2015.
“The new regulations for lifeboats on the Norwegian Continental Shelf will be an important growth driver for Schat-Harding as market leader. At the same time, Schat-Harding and Noreq combined will be able to lead the market internationally in relation to the offshore, cruise and merchant fleet segments. As the leading private equity fund in Norway, we are in an excellent position to create a global market leader with a basis in Norway,” says Morten Blix, Senior Partner of Herkules.
The Largest Service Network
Schat-Harding already has the world’s largest service network for life-saving equipment and, through the combination, Schat-Harding will become the chosen service partner for Noreq’s 4,200 units installed worldwide.
“We see considerable opportunities for growth through additional acquisitions and organic growth. Herkules’ access to capital and its expertise in developing companies will be an important contributor to realizing the market potential in the years ahead,” says Birger GrÃ¥then, Managing Director of Umoe Schat-Harding Services.
Leading in Terms of Innovation
Schat-Harding’s lifeboat type FF 1200 is the first in the world to have completed a full-scale test pursuant to the new requirements for free-fall lifeboats on the Norwegian Continental Shelf. The FF 1200 also holds the record for the world’s highest free fall at 65.1 meters.
“With Herkules as our financially strong new principal owner, we will be able to continue with our product development and grow into new markets based on our leading position in the North Sea,” says Geir Arne Veglo, Managing Director of Umoe Schat-Harding Equipment.
Meanwhile, Noreq has enjoyed great international success in recent years with its new series of ‘enclosed’ lifeboat davits in which all the critical components of the davits are protected inside the davit structure – protected from demanding weather conditions and wear and tear. The new davits are innovative and result in substantial cost reductions in connection with installation and maintenance.
“Innovation will continue to have high priority for the new company. At the same time, however, we will have strong focus on our solutions being the most favorable in terms of price – for both existing customers of Schat-Harding and Noreq, and, not least, for new customers,” says Styrk Bekkenes.
“I have been the owner of Umoe Schat-Harding for 26 years, and while the company has experienced some demanding years, the employees and management have successfully turned the company, so that it is now positioned for profitable growth,” says Jens Ulltveit-Moe, President and CEO, and majority owner of the Umoe Group. “The year 2012 was the best in the company’s history. Now is the right time to bring in new owners with competence and capital. I am convinced that the combination with Noreq will strengthen both companies and that Herkules will be an excellent owner that contributes to continued rapid growth and development from a Norwegian base.”
Schat-Harding World Record Freefall Lifeboat Drop