National Oilwell Varco said it was in acquisition mode at its annual earnings call this week, and it didn’t take long for the Houston-based company to make good on its claim.
The company announced plans to acquire NKT Flexibles, a Danish manufacturer of flexible pipe products and offshore systems, for $670 million this morning. The acquisition came just hours after NOV reported a nearly 30 percent increase in its fourth quarter earnings for 2011 of $574 million
The oil supplier plans to close the deal in the first half of 2012 for the purchase of NKT. Pete Miller, chief executive officer of National Oilwell Varco, said the acquisition could improve the company’s footing in the oil and natural gas industry.
“The incorporation of NKT’s highly technical design capability and business into our rig technology group is an exciting and strategic opportunity for NOV,” Miller said. “The addition of NKT’s technology and expertise to our current suite of products for the offshore production market significantly increases our footprint in this growing segment of the oil and gas industry.”
NKT designs and manufactures flexible pipe products and systems, including products associated with floating production, storage and offloading vessels (FPSOs).
Analysts viewed the announcement as a savvy move.
Energy analyst Bill Herbert of Simmons & Co. says that the acquisition further indicates NOV’s plans to expand into the FPSO arena, noting that “this year we should begin to see its FPSO strategy bear fruit.”
NKT is currently owned as a joint venture by Subsea 7 and NKT Holdings. The company recently signed a supply agreement with Petrobras, the Brazilian energy company, where it plans to build a new plant. Analysts predict that the acquisition will further strengthen NKT’s value.
“NKT should see significant benefits from being under the NOV umbrella,” Barclays Capital wrote in an equity research note on Friday morning. “NOV has a history of acquiring niche technology companies and using its operational expertise to wring substantially higher operating profits from them.”
