Business Context and Reporting Period
This Form 6-K, dated March 13, 2007, reports the signing of a final Merger Plan between Statoil ASA and Norsk Hydro ASA. The transaction involves the demerger of Norsk Hydro's Petroleum Activities and their merger with Statoil to form a new entity, StatoilHydro ASA. The financial effective date for the merger is January 1, 2007. The filing does not contain standard quarterly financial results (revenue, profit, cash flow) for either company; it focuses exclusively on the structural and legal terms of the proposed business combination.
Key Financial Metrics and Transaction Terms
- Exchange Ratio: Norsk Hydro shareholders will receive 0.8622 shares in the merged company for every share they own in Norsk Hydro.
- Ownership Structure: Upon completion, Norsk Hydro shareholders will own 32.7% of the merged company, while Statoil shareholders will own 67.3%.
- Debt Allocation: Norsk Hydro's Petroleum Activities are allocated a net interest-bearing debt of NOK 1 billion as of the effective date.
- Dividends: Statoil is scheduled to distribute an ordinary dividend of NOK 9.12 per share, and Norsk Hydro is scheduled to distribute NOK 5.00 per share (charged to Petroleum Activities) prior to implementation.
- Capital Changes: Statoil's share capital will increase by NOK 2.6 billion through the issuance of approximately 1.04 billion new shares. Norsk Hydro's share capital will be reduced by approximately NOK 3.2 billion.
- Guarantees: A guarantee portfolio related to Petroleum Activities with a liability of approximately NOK 20 billion will be transferred to the merged company.
Material Changes and Strategic Rationale
The primary material change is the creation of a new global petroleum entity. The stated rationale is to create a globally competitive player and the world's largest offshore operator in water depths exceeding 100 meters. The merger is structured as a "merger of equals."
- Workforce: The new company will employ approximately 31,000 people, including roughly 5,000 transferred from Norsk Hydro.
- Asset Transfer: All assets, rights, and obligations related to exploration, production, transport, processing, and marketing of oil and gas, as well as wind power interests, will transfer to the merged entity. Norsk Hydro's remaining activities (Aluminium, hydroelectric power, etc.) will remain as a separate entity.
- Leadership: Helge Lund will serve as CEO of the merged company. The Board of Directors will consist of ten members, with Eivind Reiten as Chairman.
Guidance, Outlook, and Risks
Outlook: Management emphasizes that the merger is a growth-oriented response to industry challenges, aiming to secure long-term growth on the Norwegian continental shelf and strengthen international competitiveness.
Conditions for Completion: The merger is contingent upon several factors, including:
- Approval by the general meetings of both Statoil and Norsk Hydro.
- Receipt of necessary regulatory approvals from public authorities and third parties.
- Settlement of the estimated "Demerger Balance" (inter-company financial adjustments).
- Expiration of the creditor objection period without unresolved material objections.
- Continued listing of Statoil on the Oslo and New York Stock Exchanges.
Risks and Contingencies: The filing notes that if specific assets or obligations cannot be transferred due to lack of approval, the parties must enter into agreements to replicate the rights/obligations or provide cash compensation. Disputes regarding the Demerger Balance calculation will be settled by a jointly appointed auditor or arbitration in Oslo.
Investor Verification Checklist
- Verify the approval status of the Merger Plan at the extraordinary general meetings of both Statoil and Norsk Hydro.
- Confirm the receipt of all necessary regulatory and antitrust approvals from relevant jurisdictions.
- Monitor the final calculation and settlement of the "Demerger Balance" to ensure the NOK 1 billion net debt target is met.
- Review the upcoming Form F-4 registration statement filed with the SEC for the draft prospectus details.
- Assess the impact of the NOK 20 billion guarantee liability transfer on the merged entity's credit profile.
- Track the timeline for the integration of IT/IS systems and the transfer of approximately 5,000 employees.