National Oilwell Buys Danish Pipeline Maker for $673 Million

National Oilwell Varco Inc. (NOV), the largest U.S. oilfield-equipment maker, agreed to buy NKT Flexibles for $673 million (3.8 billion kroner), expanding its ability to sell gear for deep-water exploration projects.

NKT, which is 51 percent owned by Brondby, Denmark-based NKT Holding A/S (NKT) and 49 percent owned by Subsea 7 SA, makes flexible pipelines for pumping oil, gas, water and chemicals for offshore projects. The all-cash deal is expected to close in the first half of the year, Houston-based National Oilwell Varco said in a statement today.

The deal will allow National Oilwell Varco to sell about $150 million in equipment to a “big” floating production, storage and offloading vessel, or FPSO, Chief Financial Officer Clay Williams said today in a telephone interview. Before the deal, National Oilwell was able to supply $120 million to $130 million of gear to such a vessel, he said.

“What we really want to do is put capital to work in products and services that help our customers to make a more efficient FPSO,” Williams said. A large vessel may cost “well over” $1 billion, Williams said.

The company has been looking to acquire more manufacturers of FPSO gear, Chief Executive Officer Pete Miller said in a telephone interview yesterday. The vessels pump and store oil and gas in deep-water projects where pipelines to land aren’t available.

FPSO Strategy

“This year we should begin to see its FPSO strategy bear fruit,” Bill Herbert and Ian Macpherson, analysts with Houston- based Simmons & Co. International wrote in a note today.

National Oilwell rose 4.1 percent to $80.22 at 10:37 a.m. in New York, after climbing as much as 4.3 percent, the most intraday in a month. The shares have climbed 13 percent this year before today.

National Oilwell spent $1.4 billion in cash on nine acquisitions last year, Williams said on an investor call yesterday. National Oilwell completed its $777 million purchase of Ameron International Corp., its largest last year, on Oct. 5.

Miller said yesterday in an interview the company was looking at deals valued between $250 million and $750 million and was “pretty close” to a couple of them.

Biggest Nordic Sale

The transaction would be this year’s biggest sale of a Nordic asset after DS Smith Plc’s $2 billion (1.6 billion euro) purchase of Svenska Cellulosa AB’s packaging unit, according to data compiled by Bloomberg.

NKT Holding, which owns the world’s biggest maker of industrial vacuum cleaners, and Subsea (SUBC), an oilfield-services provider, said Sept. 20 they would look for potential buyers for NKT Flexibles.

The pipeline unit, which has a plant in Denmark, is doubling capacity by building another manufacturing site in Brazil, Williams said today. NKT Flexibles has a contract for future work with Petroleo Brasileiro SA, according to the statement today.

NKT Holding climbed 9.3 percent 242.50 kroner at the close in Copenhagen, the most in more than four months. Subsea rose 2.7 percent to 126.5 kroner in Oslo.

To contact the reporters on this story: David Wethe in Houston at dwethe@bloomberg.net; Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.