Aqualis ASA (Aqualis) and Braemar Shipping Services plc (Braemar) entered into an agreement whereby Aqualis will acquire three business lines (Adjusting, Marine and Offshore, jointly BTS) representing the majority of the Braemar Technical Services division (the Transaction). The combined company, to be renamed AqualisBraemar, will be a leading adjusting, marine, offshore and renewables consultancy with a broadened service offering across all major basins.
Through the transaction, existing and potential clients of AqualisBraemar will be able to benefit from gaining access to new capabilities and broader suite of services on offer as well as increased manpower and geographical footprint to enable even quicker and more cost-efficient operational support at or in close proximity to clients’ offices and assets.
The combined company will operate under the united brand AqualisBraemar and will have four main business lines, each with a global offering and strong presence in their respective markets: Adjusting, Marine, Offshore and Renewables. The consideration in the transaction comprises a combination of Aqualis shares and performance-based warrants, making Braemar the largest shareholder in Aqualis. Further details regarding the Transaction are described below.
The combined company’s revenue for the twelve months ended December 31, 2018 was approximately USD 76 million, with Aqualis and BTS representing approximately USD 36 million and USD 40 million respectively
The combination is expected to result in significant benefits for stakeholders, including creation of significant shareholder value through estimated run rate EBITDA synergies of approximately USD 2.0 million, expected to be implemented in full by year-end 2021
Braemar will become the largest shareholder in Aqualis, with an initial shareholding of approximately 26%, potentially increasing to 33% depending on business performance
The combined company’s executive management will consist of CEO David Wells (Aqualis), CFO Kim Boman (Aqualis), Group and Offshore COO Reuben Segal (Aqualis) and COO Insurance Services Grant Smith (Braemar), with other senior divisional management selected from top talent within both companies. The head office will be located in London
Completion of the transaction is subject to the approval by Aqualis’ shareholders at the Annual General Meeting (the “AGM”), expected to be held on or about 11 June
Certain existing Aqualis shareholders have undertaken to support the Transaction by way of voting in favour at the AGM, including election of Braemar CEO James Kidwell to the Board of Directors. Braemar have undertaken to support the re-election of Glen R?dland to the board of directors
The combined company’s name is suggested to be changed to AqualisBraemar ASA at the AGM conditional upon the completion of the Transaction. Its shares will continue to be listed on Oslo Stock Exchange under the ticker AQUA
To expand the combined company’s liquidity buffer during the integration phase, Aqualis proposes fully underwritten equity issues raising gross proceeds of approximately USD 6 million, of which USD 2 million will be provided by Braemar
The previously announced proposal for ordinary dividend of NOK 0.10 per Aqualis share will be withdrawn because of the contemplated Transaction
David Wells, CEO of Aqualis, comments: “Aqualis and Braemar Technical Services are two of the leading marine consulting companies globally. By joining forces, we create a more sustainable business with strong platform for international growth. We will be better able to support our clients’ growth by offering our joint and enhanced leading expertise. With our larger scale, more resources and our engaged and talented people, we will improve our ability to meet our clients’ needs globally” Through the Transaction, Aqualis will acquire the majority of the Braemar Technical Services division, specifically the three business lines Adjusting, Marine and Offshore. Braemar has a leading brand name in the industry, with BTS entities having operated in the markets for more than 150 years. Marine and Adjusting are global market leaders in their respective niches, while Offshore has a global service offering with a particularly strong position in the Asia Pacific region. Key financial figures and other information regarding BTS can be found in the attached presentation.
James Kidwell, CEO of Braemar, comments: “We are delighted to be announcing the sale of substantially all of Braemar’s Technical division to Aqualis ASA in exchange for an equity stake in the enlarged group. Our respective businesses fit well together and the combination will create a market leading position in Offshore, Marine, Adjusting and Renewables services with global coverage which will enable the stronger combined business to unlock significant revenue and cost synergies.
We strongly believe that the enlarged Aqualis group, which will retain the Braemar name and trade as AqualisBraemar, will bring numerous benefits and opportunities to both clients and employees going forward.
As the largest shareholder in AqualisBraemar we look forward to developing the business with the management team, which has an excellent track record of growing businesses in these sectors.”
Overview of the combined company
The combined company will operate under the united brand AqualisBraemar and will be divided into four divisions, each with a strong presence in their respective markets: Offshore, Marine, Adjusting and Renewables. The combined company’s revenue for the twelve months ended December 31, 2018 was approximately USD 76 million, with Aqualis and BTS representing approximately USD 36 million and USD 40 million respectively, and at the end of Q1 2019 it had on average a combined total of approximately 432 full-time equivalent (“FTE”) employees globally. The combined company’s name is suggested to be changed to AqualisBraemar ASA at the AGM, conditional upon the completion of the Transaction. After the completion of the Transaction, AqualisBraemar’ shares will continue to be listed on Oslo Stock Exchange under the ticker AQUA.