Kraken Robotics Enters into Letter Of Intent to Acquire PanGeo Subsea

09.04.2021
Kraken Robotics Inc. (TSX-V: PNG, OTCQB: KRKNF), Canada’s Ocean Company, is pleased to announce that it has entered into a non-binding letter of intent (the “LOI”) dated April 8, 2021 in connection with the proposed acquisition of PanGeo Subsea Inc. (“PanGeo”) from Cahill Innovation Inc, a member of the Cahill Group of Companies, and Argentum Asset Management AS. Moya Cahill, a director of Kraken, is a shareholder of Cahill Innovation Inc, and she resigned as a director of Kraken prior to the approval and execution of the LOI in order to ensure proper governance and review of the transaction by a fully arm’s length board.





PanGeo is a private Canadian services company specializing in high resolution 3D acoustic imaging solutions for the sub-seabed. This proposed acquisition would accelerate Kraken’s transformation to a Robotics/Data as a Service model by increasing recurring service revenue and providing increased exposure to the non-defense market, including the offshore renewable energy market. Following completion of the proposed acquisition, Kraken would offer a holistic solution of world-leading technologies and services in subsea acoustic and optical imaging: Kraken’s suite of ultra-high resolution seabed 3D acoustic imaging sensors, autonomous robotics, and optical laser scanning paired with PanGeo’s suite of leading-edge sub-seabed high resolution 3D acoustic imaging systems.

Acquisition Rationale
The proposed acquisition would create a Canadian-headquartered global leader in ocean technology in the areas of subsea and sub-seabed imaging. If completed, Kraken would benefit from a number of synergies and advantages including:

- PanGeo would provide a broader foundation for Kraken to build a significant recurring revenue stream from a provision of reduced carbon emissions survey services.
- The acquisition will result in a more balanced blend of revenue (both defense and commercial) and product mix (product sales and services).
- PanGeo has an attractive diversified customer base consisting of leading companies in offshore renewables and offshore energy. Most of PanGeo’s offshore survey revenue is generated in Europe, with new opportunities emerging in the U.S. and Asia.
- PanGeo’s geotechnical and geophysical expertise, operational excellence and service delivery capabilities for the marine survey market are complementary to Kraken’s newly emerging service business. Kraken’s service capabilities consist of ultra-high-definition subsea imaging technologies that have been proven and well received in the defense market but are just as applicable to the commercial subsea survey and inspection markets, albeit delivered as a service (rather than a product sale).
- PanGeo’s technology augments Kraken’s to provide a more complete range of subsea surveying services. PanGeo’s Synthetic Aperture Sonar 3D seabed penetrating technology, which allows customers to understand the characteristics of the sub-seabed, will pair well with Kraken’s high ultra-high-definition seabed imaging technologies. This is essential to understanding the sub-seabed characteristics for infrastructure builds as well as maintenance and repair (buried pipelines, buried cables, buried UXOs, offshore wind turbine and offshore oil platform construction).
- Kraken will be able to take advantage of synergies to advance the development of technology on both platforms more quickly and more efficiently. The combined platforms will have a strong R&D feedback loop as new technologies are deployed, tested, and iterated in Kraken’s services business.
- Kraken does not expect significant integration risk as PanGeo’s management team is also headquartered, and has significant operations, in Newfoundland and Nova Scotia.

Karl Kenny, Kraken President and CEO said:“Since plans for our OceanVision project started in 2018, we have been preparing our industry leading Synthetic Aperture Sonar and 3D underwater laser scanning technologies to be used in a Robotics/Data as a Service (RDaaS) business model as opposed to a product only strategy. While customers in the defense industry generally purchase this technology, in the commercial market customers are more focused on the provision of services by capable third-party companies. We believe that this potential acquisition would complement Kraken’s existing products and services with a stronger base of recurring revenues. As in the past, we expect PanGeo and Kraken will continue to work with many offshore service companies that prime these jobs and integrate specific scopes of work from various sub-contractors.”

Moya Cahill, PanGeo’s co-founder and CEO noted:“Notwithstanding that there is due diligence and negotiation for Kraken to complete this acquisition, this opportunity is very exciting for PanGeo as Kraken and PanGeo are world leaders in seabed and sub-seabed technology applications, respectively. Assuming closing of this transaction, I am confident that ocean industry customers will benefit from a broader suite of offerings from sensors, platforms, and service delivery solutions. PanGeo has a more than 10-year commercial track record of providing 3D acoustic imaging solutions to offshore renewable energy, offshore energy, and defense customers.”



Location: St John's, NL, Canada









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