Sandvik has signed an agreement to divest the majority (70%) of its Varel Drilling and Completions business for SEK900mn (US$90m).
The Varel operations, relating to the oil and gas industry, will be sold to the private equity firm Blue Water Energy and its privately-owned co-investor Nixon Energy Investments. Swedish-based mining, quarrying and metal cutting equipment group Sandvik will retain a minority ownership of 30% of the company and hold a position on the board.
Björn Rosengren, president and CEO of Sandvik, said the divestment is being made to enable the company to focus on its core business areas in mining. The sale is expected to close during the first quarter of 2020.
“While Sandvik keeps the mining related part of Drilling and Completions, the oil and gas related operations will now receive full attention from its new owners to support profitable growth,” he added.
In the oil and gas industry, Sandvik Drilling and Completions is a global supplier of drilling solutions focusing on drill bits and downhole products for well construction and well completion.
Upon closing, Sandvik says the divestment will generate a positive cash flow impact of an estimated SEK700mn (US$70m), net of expected transaction costs.
Sandvik Drilling and Completions will remain consolidated in the financial statements of Sandvik Mining and Rock Technology until closing of the transaction, which is subject to the approval of relevant authorities.