Here's how Vard will milk benefits from Fincantieri takeover

Joint business opportunities abound.

According to CIMB, joint business opportunities are said to abound as Fincantieri has yards in the US and Middle East which could allow Vard to cross-sell its designs. Likewise, Fincantieri could tap Vard’s yards in Brazil and Vietnam where it does not operate in.

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Given Vard’s lack of presence in the Gulf of Mexico, some investors enquired whether Vard would consider acquiring/utilising Fincantieri’s US yards to build OSVs for customers eyeing the US market. Due to the Jones Act, vessels traded in US waters have to be built in the US. However, the likelihood of this is low.

Existing yards are not ideal for OSV building, due to their configurations. More importantly, they are located at the Great Lakes, in the north-eastern part of the US, at the US-Canadian border.

Vard has a marine system division which manufactures and installs vessel electrical systems: Vard Electro. This is an ancillary division which complements Vard’s shipbuilding business.

Vard has been selective in selling its proprietary electoral systems, for fear of knowledge transfers. However, it sees more opportunities to sell these to its sister business units within Fincantieri.

Similarly, Fincantieri has a marine system unit which designs and manufactures ship propulsions and power generators, and could sell these systems to Vard. These vessel systems are integral to ships and the shipbuilding supply chain. Further collaboration between the two could spur future product innovation.

Fincantieri recently created a dedicated offshore business unit (prior to its acquisition of Vard) with a focus on drillships. In collaboration with Norwegian  oilfield solutions firm, Aker Solutions, Fincantieri has introduced the next generation of drillships, under the “Overdrill design”.

This design allows drilling contractors to drill to a maximum depth of 50,000ft. What Vard could bring to the table is its offshore expertise and project-management skills.

Last but not least, Vard could enlarge its customer base through Fincantieri. For example, Italian oil service giant, Saipem, shares the same ultimate parent as Fincantieri. This could help Vard establish a closer working relationship with Saipem.