OSLO - Norwegian shipbuilder Aker Yards will sell 70 percent of three merchant vessel yards to Russian-owned investment firm FLC West for 291.9 million euros ($450 million), it said on Tuesday, lifting its shares sharply.

Shares in Aker Yards, battered by persistently weak earnings and troubles in its Finnish ferry operations, surged as much as 32.5 percent on the news to a four-month high, before paring gains to trade up 25.5 percent at 64 crowns.

Analysts said the price looked good for Aker Yards and the sale could herald a further split-up of the remaining parts, as major shareholders are keen on different parts of the group.

But Chairman and acting Chief Executive Svein Sivertsen told Reuters: "This is not a split-up of Aker Yards. This is an area where we choose an industrial, offensive solution and at the same time reveal shareholder values."

The deal implies a total value for 100 percent ownership of 417 million euros, based on zero debt and zero working capital, said Aker Yards ASA, which will retain a 30 percent stake.

Aker Yards said it will book a net gain of about 1.2 billion Norwegian crowns ($227.2 million) on the sale of the majority in three yards in Ukraine and Germany in its merchant vessels business.

Fondsfinans analyst Arne Egil Roenning said: "I think this is a fantastically good price for the Merchant part."

"I had estimated a value of 1-1.5 billion crowns. Now it is priced at over 3 billion crowns on a 100 percent basis," said Roenning who had a target price of 55 crowns on the stock but said he would raise that by at least 15-20 percent.

Pareto’s Erik Bergoo said: "This is a very good price."

The transaction is expected to be completed before the end of summer 2008, Aker Yards said.

The divestment will reduce group turnover for 2008 by about 6 billion crowns, it said.

Aker Yards will retain 30 percent of Aker Yards Ukraine Holding AS, which will own 100 percent of the yards in Nikolaev, Ukraine, and in Wismar and Warnemunde in Germany, it said.

The deal does not include the merchant division’s Floroe shipyard in Norway, in which Aker Yards retains full ownership.

Based in Luxembourg, FLC West is a Russian state-controlled investment company that invests in industries of strategic importance to the Russian Federation, Aker Yards said.

"The three shipyards in Aker Yards Ukraine Holding AS will through the new ownership model be in a strong position to compete for contracts for building merchant vessels for Russian operators," Aker Yards said.

"We want to strengthen the industrial set-up of these three yards by specialising them further," Sivertsen told Reuters. "We see a large industrial potential in the Russian market."

The deal is subject to approval by relevant authorities, including competition authorities in Germany and Ukraine.

Analysts said the sale could pave the way for the two biggest shareholders, South Korean STX Shipbuilding with 39.2 percent of the stock and family-owned Havyard Invest with 10.2 percent, to split the rest of Aker Yards.

STX is reported to be interested in the cruise ship operations and Havyard in the specialty vessels part of the group, which has 18 shipyards in Norway, Brazil, Finland, France, Germany, Romania, Vietnam and Ukraine.

Analysts said a split-up seemed a likely possibility.

"For me this seems like a likely solution. I think that neither Havyard nor STX is interested in this bit. That raises the likelihood that they will find a structural solution for what remains," Fondsfinans’ Roenning said.

Havyard has asked for an extraordinary shareholders’ meeting on April 1 where it aims to elect new board members. —Reuters