The merged classification giant, in which DNV will have a majority stake, will trigger concerns among competitors, writes Adam Corbett in London.
Det Norske Veritas (DNV) of Norway’s merger with Germanischer Lloyd (GL) will create a new classification superpower that is set to dominate the marine-certification business.
The two have been linked as potential merger candidates ever since DNV stepped into the race to capture GL when the Hamburg-based class society was being pursued by France’s Bureau Veritas.
This week they ended fresh speculation with an announcement that DNV will hold a 63.5% majority stake in the merged DNV GL group, which will be headquartered in Hovik, Norway.
The two societies appear to be a good fit. DNV is the larger but they have synergies and similar ambitions that suggest both would benefit from a merger.
The new business will have a combined annual revenue of $3bn, while merging offices and staff should boost earnings. It will be by far the largest marine classification society with a combined fleet of 260 million gross tons (gt), well ahead of closest rival ClassNK with 210 million gt.
DNV, which operates as an independent foundation with no shareholders, employs 8,453 people in 300 offices in 100 different countries. Last year its revenue was NOK 10.2bn ($1.8bn) and the DNV-classed fleet amounted to 160 million gt. DNV ranks second on the Paris Memorandum of Understanding (MOU) port-state-control’s list of best-performing recognised organisations (ROs), while GL comes fourth.
GL is owned by private investor Gunter Herz Holding, which retains the remaining 36.5% following the merger. It employs 6,900 people in 200 offices dotted around 80 countries. It had a turnover of EUR 767m ($1bn) last year and the GL-classed fleet amounted to 100 million gt.
Both are progressive companies and have been on the acquisition trail recently.
DNV made its biggest acquisition so far by taking a 75% stake in energy and sustainability-services company KEMA.
GL also moved in on Noble Denton, an offshore services company, and renewable-energy company Garrard Hassan.
Both DNV and GL have similar aims to expand and diversify along the energy chain and develop synergies with their existing expertise.
For GL a key attraction would be DNV’s prominence in the offshore market, while the Norwegian class society has its eye on GL’s domination of the German shipowning sector, in particular the containership-certification business, which makes up around 45% of its fleet.
Both have been active in attempting to encourage fuel-efficient technology and designs, as well as providing consultancy and advisory work on fuel efficiency to shipowners.
Yet while the long-term outlook for the container business might be good, and the fleet expanding, the current downturn and collapse of the German KG (limited partnership) market has hit GL hard and it was seeking to shed around 90 jobs through voluntary redundancies. It was GL that made the approach to DNV suggesting it was starting to feel the need to act (see story, page 2).
Should a merger go ahead it will be a concern for the new company’s major competitors, American Bureau of Shipping (ABS) and Lloyd’s Register, which rank third and fourth in the marine business,which will be aware of the emergence of a new certification, consultancy and risk-assessment powerhouse in the offshore and renewable-energy sectors.
Source: http://www.newmariners.com
