Illustration (Kraken Robotics)

Kraken Robotics outlines plans to acquire subsea services company

Canadian marine technology company Kraken Robotics has entered into a non-binding letter of intent (LOI) to acquire 3D acoustic imaging specialist PanGeo Subsea.

Illustration (Kraken Robotics)
Illustration (Kraken Robotics)
Illustration (Kraken Robotics)

The LOI, dated 8 April 2021, is related to the proposed acquisition of PanGeo Subsea from Cahill Innovation, a member of the Cahill Group, and Argentum Asset Management.

Moya Cahill, a shareholder of Cahill Innovation, resigned as a director of Kraken prior to the approval and execution of the LOI in order to ensure proper governance and review of the transaction by the board, the company informed.

The proposed acquisition would accelerate Kraken’s transformation to a Robotics/Data as a Service (RDaaS) model by increasing recurring service revenue and providing increased exposure to the non-defense market, including the offshore renewable energy market.

Following completion of the proposed acquisition, Kraken would offer a holistic technology and services solution for subsea acoustic and optical imaging with headquarters in Canada.

Although the LOI remains non-binding, it is anticipated that the purchase price will be between C$18-24 million ($14-19 million), based on PanGeo’s performance over the two-year period following the acquisition, to be paid by way of cash and stock over that period.

Commenting on the LOI, Karl Kenny, Kraken’s president and CEO, said: “Since plans for our OceanVision project started in 2018, we have been preparing our industry leading Synthetic Aperture Sonar and 3D underwater laser scanning technologies to be used in a RDaaS business model as opposed to a product only strategy.

“While customers in the defense industry generally purchase this technology, in the commercial market customers are more focused on the provision of services by capable third-party companies. We believe that this potential acquisition would complement Kraken’s existing products and services with a stronger base of recurring revenues.

“As in the past, we expect PanGeo and Kraken will continue to work with many offshore service companies that prime these jobs and integrate specific scopes of work from various sub-contractors”.

Moya Cahill, PanGeo’s co-founder and CEO, added: “Assuming closing of this transaction, I am confident that ocean industry customers will benefit from a broader suite of offerings from sensors, platforms, and service delivery solutions. PanGeo has a more than 10-year commercial track record of providing 3D acoustic imaging solutions to offshore renewable energy, offshore energy, and defense customers”.

Completion of the acquisition is subject to, among other matters, the completion of due diligence, the negotiation of a definitive agreement providing for the transaction, and satisfaction of certain other conditions to be negotiated therein.

Given the materiality to Kraken, it is not anticipated that any Kraken shareholder approval would be required to complete the proposed acquisition.

Pursuant to the LOI, the parties have agreed to a 60-day exclusivity period during which they will complete their due diligence and negotiate exclusively with each other with a view to settling the terms of the transaction and the form of definitive agreement.

Further details will be provided upon successful completion of the due diligence period and the signing of a definitive agreement.

The LOI may be terminated by either party if a definitive agreement is not entered into by 31 May 2021, the companies said. In addition to other conditions, the proposed acquisition remains subject to the approval of the TSX Venture Exchange.