It’s official. Maersk confirms 2-way split option

Following earlier reports that the Danish conglomerate Maersk was considering splitting the company into two divisions, or into several smaller businesses as part of its strategic review, the split option has now been confirmed by the company.

Maersk has confirmed it is working to split the company into two separate entities: one focused on shipping and logistics, the other on oil and gas sector.

In June 2016, the board of directors tasked the management of Møller – Mærsk A/S to perform a review focusing on the strategic and structural options for the Maersk Group with the objective of “generating growth, increasing agilities and synergies and unlocking and maximising shareholder value with the long-term view.”

The company on Thursday said it has decided to progress with the two-way split option, with its growth plan to focus on transportation and logistics services as an integrated Transport & Logistics company.

“Building on the Group’s unique position within container transport and port operations, and significant position in supply chain management and freight forwarding, Transport & Logistics will leverage its leading position through new product offerings, digitalised services and individualised customer solutions,” Maersk said in a statement on Thursday.

The oil business, however, is a different story. The company expects the energy part of the business, covering oil and gas production, drilling and supply services, will need different solutions for future development including separation of entities individually or in combination from A.P. Møller – Mærsk A/S in the form of joint-ventures, mergers or listing. Depending on market development and structural opportunities, the objective is to find solutions for the oil and oil related businesses within two years, Maersk said.

Thus, as mentioned earlier, Maersk is set to reorganize its businesses portfolio into two independent divisions: an integrated Transport & Logistics division and an Energy division.

“This will ensure focus on driving synergies and developing new products and services in Transport & Logistics as well as focus on separately developing structured solutions for our oil and oil related businesses,” Maersk said.

Chairman of the Board, Michael Pram Rasmussen says: “The industries in which we are operating are very different, and both face very different underlying fundamentals and competitive environments. Separating our transport and logistics businesses and our oil and oil related businesses into two independent divisions will enable both to focus on their respective markets. This will increase the strategic flexibility by enhancing synergies between businesses in Transport & Logistics, while ensuring the agility to pursue individual strategic solutions for the oil and oil related businesses.”

Transport & Logistics will consist of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry based on a one company structure with multiple brands.

As for the Energy Division, it will consist of Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers.

Long term growth in energy demand and sharp reductions in investments in the global E&P industry in recent years, leading to an expected reduction in oil supply in the coming years provide opportunities to grow Maersk Oil based on the company’s key technical competencies, Maersk said.

Sharper focus for oil, limited offshore investments

The company says that Maersk Oil will adjust its current strategy to focus its portfolio in fewer geographies to gain scale in basins, particularly in the North Sea, where it can leverage its strong capabilities within subsurface modelling, well technology and efficient operations. Maersk Oil will aim to strengthen its portfolio through acquisitions or mergers.

Further, Maersk Oil will mature existing key development projects, while keeping exploration activities and expenses at a low level. While the strategic focus will be reflected in a disciplined capital allocation, investments in strategic projects already sanctioned or under development will continue as planned.

“Maersk Drilling, Maersk Supply Services, and Maersk Tankers will continue to optimise their market position and operation with the existing fleet and order book. Additional investments in the Group’s offshore service businesses and Maersk Tankers will be limited,” Maersk said.

Group CEO of A.P. Møller – Mærsk A/S, Søren Skou says: “Both Energy and Transport & Logistics have strategies positioning them for growth and strategic agility. Transport & Logistics will be able to provide new and digitised world-class solutions for customers, while at the same time capture functional cost synergies and better utilization of existing assets. Energy is well positioned to leverage Maersk Oil´s expertise and gain scale in select geographies, particularly in the North Sea. Its structural agility will enable management to pursue new and different structural solutions and investment.”

The company will in fourth quarter 2016 be hosting a Capital Markets Day, where Group Management and the management teams for Transport & Logistics and Energy will provide further insights into the reorganization and future strategy.

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Posted on September 22, 2016 with tags .

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