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August 18, 2005

Aker and Kvaerner to be merged?

Kvaerner ASA, the parent company of Kvaerner Philadelphia Shipyard, looks set to be absorbed into Aker.

Kvaerner and Aker today announced the start of negotiations on a possible "triangle merger" that would see Kvaerner merged into the Aker group with settlement in Aker A shares. Following such a merger it is Aker's intention to make a cash payment to the shareholders in the order of NOK 1 billion.

This plan under consideration means that Kvaerner ASA will merge with Aker Maritime Finance AS, a wholly owned subsidiary of Aker ASA. Kvaerner's current shareholders will receive settlement in the form of Aker A shares. The two companies' stock market price will form the basis for negotiations concerning the exchange ratio for the merger.

By integrating Kvaerner into Aker, savings will be achieved in relation to the two parent company structures which now exist, as well as a simplified ownership structure without cross-ownership. This is a simplification appreciated by the market.

"Over the past year Kvaerner has significantly simplified the company and made its value clearer. At present Aker B shares constitute Kvaerner's most important asset. Now we are ready to bring the work in Kvaerner to a conclusion as it was first outlined at the company's annual general meeting on 2 July 2004, says Lone Fonss Schroder, chairman of Kvaerner ASA."

"Aker's strong liquidity situation will not be weakened by the implementation of the merger, as the merger will eliminate corresponding liabilities related to the previous purchase of Aker American Shipping ASA," says Leif-Arne Langoy, president and CEO of Aker ASA.

"The way we plan to effect the merger, Kvaerner's current involvements, commitments and holding of Aker B shares will still be kept separate from Aker's other activities, and the merged subsidiary, including former Kvaerner, will on an independent basis have a strong balance sheet viewed against its commitments,", Langoy adds.

Kvaerner and Aker are working to finalize a merger agreement by the end of August. This will make it possible to hold extraordinary general meetings in the companies by the end of September and to complete the merger by the end of the year.

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