In late November 2001, an agreement was reached between the board of Kværner and its largest shareholder, Aker Maritime, on a financial solution to save the troubled Norwegian engineering and construction group. The employees reluctantly gave their consent to the deal, in the face of possible bankruptcy.
On 28 November 2001, an agreement was reached between the board of the ailing Norwegian engineering and construction group Kværner and its largest shareholder, Aker Maritime, on a financial solution to save the company (NO0110106N). Following intense negotiations, the board agreed to a controversial proposal put forward by Aker's majority owner, the Norwegian billionaire Kjell Inge Røkke, which stipulates that Kværner and Aker will merge, while fresh and desperately-needed capital will be made available via share issues. The proposed merger is to occur in March 2002, although it still requires approval by a second shareholders' meeting to be held on 19 December, as well as by the Norwegian authorities and the European Commission.
The agreed proposal is very similar to an earlier proposal put forward by Aker, which was turned down by the Kværner's board, employee representatives and other shareholders. At the time, the preferred option was an alternative plan presented by the second-largest shareholder, the Russian oil company Yukos. Aker stated that it could not approve the Yukos deal. Thus, it soon became clear that without the cooperation of the largest shareholder, the only other possible outcome was bankruptcy, and at the last minute an agreement was reached to merge the operational activities of Aker with the oil and gas division of Kværner. In return, Mr Røkke will obtain shares in the enlarged Kværner, and thereby almost double his holding – estimated to be approximately 50%.
As part of the agreement, a syndicate of investors has now agreed to underwrite the first of two proposed share issues, which is scheduled for completion in December 2001. Settlements have also been reached with a number of banks, to which Kværner is heavily indebted, over new terms and conditions on the company's loans and liabilities.
Shortly after the merger agreement was reached, Aker initiated a total reshuffle of the Kværner board, and Mr Røkke himself was elected as the new chair. However, the most surprising new board member is Yngve Hågensen, the previous leader of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO). Following his appointment, Mr Hågensen stated that he had accepted the post on the grounds that he feels reassured that Mr Røkke has no intentions of breaking up the company, Furthermore, Mr Hågensen regards himself as the guarantor of a more open and democratic consortium. Although Mr Hågensen is unable to provide any guarantees on staff reductions, he has pledged to protect the rights and powers of shop stewards.
The agreement is the culmination of a long and drawn-out battle between Mr Røkke and the board over the control of Kværner, and employees and trade union representatives at the company have expressed profound discontent with the outcome. It is very much regarded as a hostile takeover to which the employees have reluctantly given their consent, since the only other alternative was ultimately bankruptcy. In the days following the agreement, Mr Røkke spent considerable time and effort in trying to persuade the employees of Kværner that his intentions are long term and industrial, and not short-term financial gains. However, Mr Røkke has signalled that he will initiate a comprehensive process of restructuring in the new company, and will sell off or close down those parts of the group which are unable to deliver satisfactory results. Although he has not given any promises with regard to the possibility of workforce reductions, he has pledged to involve employees and their representatives in the restructuring process.
Kjell Bjørndalen, the leader of the Norwegian United Federation of Trade Unions (Fellesforbundet), which represents a large number of employees in both Kværner and Aker, stated shortly after the agreement was announced that he was happy to see a solution, and hoped that this would enable Kværner and Aker to create a common industrial platform from which to develop. Fellesforbundet and LO have very much been caught in a 'Catch 22' situation since the controversy begun, because shop stewards and employees in both companies stood firmly behind their management. There were calls for greater involvement by Fellesforbundet, particularly from employees in Kværner, but both Fellesforbundet and LO refrained from taking sides on the matter.