Cadeler A/S and Eneti Inc., two offshore wind turbine and foundation installation companies, announce today that they have entered into a business combination agreement to combine (the “Combination”) through a stock-for-stock exchange offer to be made to all stockholders of Eneti based on an exchange ratio of 3.409 Cadeler shares for each Eneti share (the “Exchange Offer”).

Following the completion of the Exchange Offer, Cadeler and Eneti shareholders will own approximately 60% and 40% of the combined company, respectively, on the basis of the share counts for each of Cadeler and Eneti as at 16 June 2023 and assuming all outstanding Eneti shares are exchanged for Cadeler shares in the Exchange Offer.

The combined group will be named Cadeler, and be headquartered in Copenhagen, Denmark, with its shares to be listed on the New York Stock Exchange (“NYSE”) in addition to its current listing on the Oslo Stock Exchange (“OSE”).

The business combination agreement has been unanimously approved by the Board of Directors of each of Cadeler and Eneti.

Eneti’s largest shareholder, together with certain of its affiliates collectively holding approximately 29% of all of the issued and outstanding shares of common stock in Eneti, and Eneti’s directors and executive officers, collectively holding approximately 7% of the issued and outstanding shares of common stock in Eneti, have entered into tender and support agreements in favor of the Combination. In addition, Cadeler’s two largest shareholders, together in aggregate currently owning approximately 45% of the total current share capital and voting rights of Cadeler, have entered into voting undertakings to vote in favor of the shareholder approval to be obtained by Cadeler.

Commenting on the Combination, Mr. Andreas Sohmen-Pao, Chairman of Cadeler said: “This is a strategic transaction combining two leading offshore wind companies. It underpins Cadeler’s vision and capability to facilitate the renewable transition, and I support the transaction on its industrial and financial merits.”

Mr. Emanuele Lauro, Executive Chairman and CEO of Eneti said: “This combination is right for our shareholders, right for our customers, and right for our employees. We are truly thrilled to be joining forces with Cadeler. Our scale and our respective capabilities will create significant value at a time when offshore wind needs reliable partners and reliable solutions. The track record of Seajacks has been built on the tireless efforts of our shore and seagoing professionals, and we are delighted Cadeler values this legacy so dearly. The prospects for our combined companies, in the context of industry demands over the coming decade, could not be brighter.”

Mr. Mikkel Gleerup, CEO of Cadeler said: “The combination will represent a significant step up in our ability to meet the increased demand globally for projects with larger scopes and project sizes in service of the much-needed green transition. To deliver on this ambition, we will provide our customers with the largest and most diverse fleet in the industry, operated by highly skilled teams with unique expertise and track records. For customers, the combined fleet will unlock unrivalled value due to increased cross-utilization of resources and improved flexibility, capacity, and agility.”

Combination rationale

Compelling strategic logic

The Combination unites two companies with decades of operating track records to offer the largest, most diversified and modern fleet of T&I wind turbine and foundation installation vessels in the industry. The Combination will position Cadeler as a robust and reliable player in the market with a true global presence through scale, a complementary fleet, and deep industry relationships. The Combination will enable the combined company to operate more efficiently, and target still larger and more complex projects as requested by customers.

The Combination is subject to customary conditions including approval from relevant authorities. Until the Combination has closed, both companies will continue operations as two separate entities.

Meaningful value creation and synergy potential

The Combination is anticipated to deliver significant run rate annual synergies of €106m, excluding transaction and change of control cost, comprising corporate and financing synergies of €18m, operational synergies of €37m and €51m through improved utilization of the combined fleets. While the cost synergies are expected to be frontloaded, the targeted utilization synergies are expected to be generated as the newbuilds enter into operation. To facilitate the completion of the Combination, Cadeler will in connection with amendments to its existing financing arrangements increase its total available debt financing facilities including for general corporate and working capital purposes and in addition hereto obtain a credit approved financing commitment to refinance the long-term debt obligation for the combined company’s fleet on the water at attractive terms, subject to completion of the Combination and definitive documentation.

Unique next generation fleet is in high demand

The Combination will result in the largest diversified fleet owned and operated by a single pure-play offshore wind turbine and foundation installation company.

The Cadeler fleet consists of 2 wind turbine installation vessels (“WTIV”s) currently on the water, 2 WTIVs scheduled for delivery in Q3/2024 and Q2/2025, and 2 wind foundation installation vessels scheduled for delivery in Q4/2025 and Q3/2026.

The Eneti fleet consists of 5 WTIVs currently on the water and 2 WTIVs scheduled for delivery in Q4/2024 and Q2/2025. Of the 5 vessels on the water, 3 of the vessels are non-core assets and subject to divestment before or after completion of the Combination.

Upon delivery of the 6 vessels under construction and disposition of the 3 non-core assets, the combined company will consist of 10 modern, capable, and complementary vessels. The effective operational homogeneity of the fleet will allow for substitution opportunities and increased vessel utilization.

The Cadeler commercial strategy to-date provides a degree of revenue certainty through 2027 and coverage of operating costs. Coupled with the open days on the Eneti fleet, the combined company will further service the existing client base and benefit from high tender activity and a growing market.

Attractive valuation relative to newbuild option

Cadeler and Eneti negotiated the terms of the Exchange Offer, and specifically the pro-forma ownership of the combined company, using customary valuation metrics for the respective enterprises on a standalone basis. For both Cadeler and Eneti, the Combination prices the resulting fleet expansion at a meaningful discount to equivalent organic growth from additional newbuilding orders and will generate accretive cash flows.

Improved capital market position and enhanced growth potential

Based on the closing share prices of Cadeler and Eneti as of 15 June 2023, the combined company will have a pro-forma market capitalization above €1.2 billion (based on an exchange rate of NOK/EUR 0.09 and USD/EUR 0.92) and a stronger credit profile, which combined should enable for increased financial flexibility to pursue an enhanced growth trajectory relative to either company’s standalone position.

As a result of a greater market capitalization and dual listing on OSE and NYSE, the combined company expects to be well positioned for increased investor attention, enhanced trading liquidity, inclusion in new stock indices and improved research coverage to the benefit of all shareholders.

Leadership team, board composition and headquarters

Mikkel Gleerup, current CEO of Cadeler, will continue as CEO of the combined company and Peter Brogaard Hansen will continue as CFO of the combined company.

Following satisfaction of all conditions to the completion of the Exchange Offer, it will be proposed for approval by the shareholders of Cadeler that the combined company will continue to have a six-member Board of Directors, of which four will be independent from the largest shareholders of Cadeler. Two new directors for the combined company will initially be designated for nomination and election to the Board of Directors of Cadeler based on proposals from Eneti. Andreas Sohmen-Pao will continue as Chairman of the Board of Directors and Emanuele Lauro, current CEO of Eneti, will be nominated for election to the Board of Directors as Vice Chairman immediately following completion of the Exchange Offer.

To facilitate the anticipated board composition following the successful completion of the Exchange Offer, Cadeler board members Connie Hedegaard and David Cogman have offered to step down from Cadeler’s Board of Directors with immediate effect. The Chairman of Cadeler, Andreas Sohmen-Pao, has expressed his gratitude to both Connie Hedegaard and David Cogman for their services on the board and their support of the Combination.

The combined company will be headquartered in Copenhagen, Denmark, and will maintain a significant presence in the United Kingdom. An integration committee comprising of Cadeler and Eneti representatives will be established to oversee the integration process to ensure a successful combination and fair treatment of all employees.

Board recommendation and shareholder support

The Board of Directors of each of Cadeler and Eneti have unanimously determined the Combination to be in the best interest of the companies’ respective shareholders. The Eneti Board of Directors has undertaken to recommend to its shareholders that they tender their Eneti shares in the Exchange Offer.

Both BW Altor PTE. Ltd. and Swire Pacific Limited, the two largest shareholders in Cadeler holding approximately 30% and 15%, respectively, of the issued and outstanding share capital and voting rights of Cadeler, have entered into voting undertakings with a commitment to vote in favor of the shareholder resolution of Cadeler at an extraordinary general meeting required for the issuance of shares in Cadeler in connection with the Combination as well as a lock-up for their shares in Cadeler until such extraordinary general meeting has been held expected to be convened for in the near future.

Scorpio Holdings Ltd., together with certain of its affiliates holding approximately 29% of the issued and outstanding shares of Eneti, and current directors and officers of Eneti, together holding approximately 7% of the issued and outstanding shares of Eneti, have entered into tender and support agreements committing to tender their shares in the Exchange Offer, subject to the terms and conditions set out in the business combination agreement.

Combination overview

The transaction is structured as a voluntary conditional registered exchange offer to the stockholders of Eneti, to be initiated by Cadeler with an exchange ratio of 3.409 Cadeler shares for each Eneti share.
Based on Cadeler’s share price of NOK 47.68 per share (as at the close of trading on 15 June 2023) and an exchange rate of NOK/USD 0.10, the proposed Combination would value each outstanding Eneti share at approximately $15.44 and the fully diluted share capital of Eneti at approximately $597 million.

The Cadeler shares are currently expected to be delivered to Eneti shareholders in the form of American Depositary Shares representing Cadeler shares.

Upon completion of the Combination, Cadeler and Eneti shareholders will own approximately 60% and 40% of the combined company, respectively, on the basis of the 197,600,000 shares outstanding for Cadeler and 38,647,119 shares outstanding for Eneti (including the expected acceleration of restricted shares under Eneti’s equity incentive plan) as at 16 June 2023 and assuming all outstanding Eneti shares are exchanged for Cadeler shares in the Combination.

In addition, if, following completion of the Exchange Offer, Cadeler has acquired or controls at least 85.01% of the issued and outstanding Eneti shares and voting rights (or such lower threshold as Cadeler may determine, in its sole discretion) and no other legal impediment to a squeeze-out merger exists, Cadeler intends, indirectly through a wholly-owned subsidiary, to initiate a squeeze-out merger under Marshall Islands law such that, following the merger, Eneti will be a wholly owned subsidiary of Cadeler. The precise consideration minority Eneti shareholders may receive in such merger may be different in form and/or value from the consideration that they would have received had they tendered their Eneti shares in the Exchange Offer.

Cadeler moreover intends to eliminate companies in the Eneti group structure incorporated in any jurisdiction on the EU’s list of non-cooperative jurisdictions for tax purposes, as adopted by the Counsel of EU as of 21 February 2023 in due course following completion of the Combination and to the extent feasible from a legal perspective.

The Combination is subject to customary closing conditions, including amongst others shareholder approval of an authorisation to the Board of Directors of Cadeler to issue new Cadeler shares in the Exchange Offer to be adopted by a 2/3 majority of share capital and voting rights represented at an extraordinary shareholders meeting of Cadeler and acceptance of the proposed tender offer by at least 85.01% of all outstanding Eneti shares (including the 36% of Eneti’s shares already subject to tender and support agreements), the absence of a material adverse change, the receipt of merger clearance as well as any applicable foreign direct investment approvals and approval for the listing of the combined company’s shares on each of the NYSE and OSE.

Indicative timetable and next steps

The offer period for the Exchange Offer will not commence until the offer and listing documentation has been duly reviewed and, if applicable, approved by all relevant regulatory bodies and will not conclude prior to the registration with the U.S. Securities and Exchange Commission of the Cadeler shares (or American Depositary Shares representing Cadeler shares) to be offered for exchange.

The Exchange Offer is expected to commence in the third or fourth quarter of 2023.

The Combination is currently expected to close in Q4 2023 subject to regulatory approvals and applicable conditions being met.
Source: Eneti