Sandvik Divests Drilling and Completions Unit
Engineering group Sandvik has completed the divestment of Sandvik Drilling and Completions (Varel) to the private equity firm Blue Water Energy and its co-investor, the privately owned Nixon Energy Investments.
Sandvik will remain a minority owner of 30% of the company and hold a position on the board.
The contribution to Sandvik’s earnings per share from the minority ownership, reported in associated companies, would have been limited based on 2019 results.
In the results for the fourth quarter 2019, Sandvik reported a related write-down of net -3.9 billion SEK. In the subsequent period until closing of the deal, changes in net assets imply a negligible capital gain, however the realized effect from reversal of the accumulated currency translation in other comprehensive income will have a negative impact of -0.5 billion SEK on the operation result in ‘other operations’ for the first quarter of 2020.
The closing of the divestment results in a positive cash flow impact of about 0.7 billion SEK during the first half of 2020, net of transaction costs.
Sandvik added that as of the second quarter of 2020 ‘other operations’ will not include any active operations. The minority owned company will be incorporated in Group activities.