Getting to this point has been a long journey, as the push towards the acquisition began way back in 2006. Koponen, Vice President, Flow and Gas Solutions, was convinced of the business logic even then, but various setbacks, not least the global economic situation in the closing years of the previous decade, forced him to bide his time. In early 2011, the acquisition returned to the agenda, and was ultimately ratified in early 2012.
Wärtsilä's ownership bid valued the British company at around 456 million euros, and making the case for such a large investment was never going to be an easy job. "Like every company that has survived this long," Timo explains, "we have a history of acquisitions. Now, some of these have been successful, but some others haven't. Things can always go wrong, which makes management wary – and rightly so! The process involves a lot of politics; it means changing minds and making people believe."
This was a particularly challenging investment in the sense that Hamworthy, as a publicly listed company, was of known value in the marketplace, and any such takeover bid in the UK is liable to a premium of 25-30%. Koponen is all too aware of this high price tag's consequences: "Our numbers, our belief in profitability and synergies needed to be high. We needed to be convinced that we could deliver more value when putting the two companies together. It's definitely more than just one plus the other: there has to be extra value."
TIMO KOPONEN Vice President, Flow and Gas Solutions
Sound business logic wins through
Once the deal had been announced, convincing of a very different kind was required in the company being acquired. Sigurd Jenssen of Hamworthy, now Wärtsilä's Director, Exhaust Gas Cleaning, gives us an insight into the concerns of some personnel:
"When the deal became public knowledge, people were concerned. We needed to be convinced that Wärtsilä saw Hamworthy and its personnel as a long-term part of their operations. There are different ways a parent company can go, post-merger. Many of us needed to know that Wärtsilä did not just acquire Hamworthy to absorb our products and shut down their most significant competitor in certain markets."
What eventually provided a foundation for the ultimately positive spirit that prevailed on both sides was recognition of the business logic behind the acquisition.
"Firstly, and most prominently," Jenssen explains, "both companies recognised environmental challenges in the marine industry as a key future growth area, encompassing emissions limitation, exhaust gas cleaning, and ballast water treatment. With the technology (as well as the industry demand for it) still relatively young, this is an ideal moment for consolidation to advance the topic and gain a firm foothold in the marketplace."
Another motivating factor is Wärtsilä's strong belief that gas is the fuel of the future, not just for land-based power production, but also for the marine industry. "While this has been part of Wärtsilä's outlook for some time, certain portfolio elements have been lacking, such as depth handling of gas processes on board vessels. The addition of Hamworthy products completes this picture; along with the main engines, fuel handling and gas carrier technology are now visibly present in Wärtsilä product lines, with strong expertise in place to support them."
SIGURD JENSSEN Director, Exhaust Gas Cleaning
The recognition of the business logic behind the acquisition provided a positive spirit that prevailed on both sides.
Hamworthy was founded in 1914 in Poole in the United Kingdom, which is the site of its head office to this day.
In addition, Hamworthy has been making advances towards the offshore industry, as they have correctly perceived that the merchant marine industry has been suffering from oversupply in the wake of crises in the world economy. Wärtsilä has been responding to the same trend, meaning that the two companies share many of the same customers and projects.
This clear synergy is strengthened when taking into account Wärtsilä's unique local presence: the industry's widest and strongest sales network in terms of manpower and geographical coverage. The opportunity to take advantage of vastly expanded distribution for the Hamworthy product and solution range was a strong point in favour of the deal for all parties concerned.
A question of culture
Within a few months of the deal going through, even the most sceptical observer would have to concede that Wärtsilä was doing this for the right reasons. As a measure of how seriously Wärtsilä considered its new subsidiaries, Koponen insisted on moving home, family and office to Poole in the United Kingdom — where Hamworthy was founded in 1914, and the site of its head office to this day. Gradually, a wider understanding of the business logic behind the merger began to penetrate both organisations.
Koponen found himself with a new challenge, however: "When the deal was finally completed, there was a huge amount of relief and elation. But that's tempered by knowing I am the major owner of the case. Bang – now you have it. It was time to start delivering."
In the aftermath of any merger, few would doubt that one of the biggest challenges is that of forging a new, shared company culture with as much sensitivity as possible. The corporate history books are crowded with spectacular newsworthy failures such as AOL-Time Warner, where even the company chairman was forced to admit that the lack of a shared culture had created "species that were inherently at war."
Koponen went about this task with his eyes and ears open, trying to find the right balance: “We are not trying to push a single Wärtsilä model. We need to have our finger on the pulse constantly. We have tens of areas in which we discuss cultural issues like this daily.
“The main challenge is to judge between what could be natural resistance and what is an underlying and essential trait, meaning we should pull back slightly. This is my main dilemma. Obviously there are also those areas in which we need to make immediate changes. A single, shared HR policy, for example, or a standard set of IT equipment, around which everything is built. But then when it comes to motivation, commitment, and such like, we see that a more accommodating attitude makes the new company much easier to relate to.”
This approach is clearly working, as positive results are already plainly visible. During 2012, Wärtsilä undertook an internal initiative to make sure its employees were fully aware of its Code of Conduct and its consequences for their work. This took the form of an e-learning module, translated into 11 languages, and despite having only partial access to Wärtsilä's systems at the time, former Hamworthy employees achieved a completion rate of almost 100% - higher than any other sector of the company.
This clearly demonstrates that the new personnel are particularly keen to engage with Wärtsilä's culture and move forward to exploit the significant opportunities ahead. And Koponen is under no illusions as to where these lie: "In contrast to other mergers that sometimes take place, the focus here is not on cost cutting. There are more than enough opportunities! Where there is strategic potential, we will go there: environmental technologies, exhaust gas cleaning, gas as future fuel, offshore industries – there is no dispute in terms of direction."