SCHEDULE: KNOT Offers $10/Unit to Acquire KNOT Offshore Partners

Knutsen NYK Offshore Tankers AS has made a non-binding offer to acquire all outstanding common units of KNOT Offshore Partners LP not already owned by KNOT for $10 per unit in cash.

Summary

• Knutsen NYK Offshore Tankers AS (KNOT) submitted a non-binding offer on October 31, 2025, to acquire all publicly held common units of KNOT Offshore Partners LP (KNOP) for $10 per unit in cash.
• The proposed cash consideration of $10 per Common Unit represents a 12% premium to KNOP's closing price on October 30, 2025.
• The offer also represents a 12%, 16%, and 23% premium to the volume-weighted average price of the Common Units over the last 30, 60, and 90 days, respectively, through October 30, 2025.
• KNOT and its affiliates currently beneficially own approximately 9.75 million Common Units, representing about 28.6% of total outstanding Common Units, 100% of Class B Units, and 208,333 Series A Preferred Units.
• Including convertible units, the reporting persons beneficially own 10,003,313 Common Units, representing 29.2% of the class, based on 34,296,771 Common Units outstanding as of June 30, 2025.
• KNOT also owns 100% of the general partner interests in KNOP through its wholly-owned subsidiary, KNOT Offshore Partners GP LLC.
• The transaction is proposed as a merger where KNOP would survive as a wholly-owned subsidiary of KNOT.

Sentiment

Score: 8

Explanation: The non-binding offer presents a significant premium to public unitholders, suggesting a positive outcome if the transaction closes. The all-cash nature provides certainty. However, the non-binding status and various conditions introduce some uncertainty, preventing a perfect score.

Positives

• The offer provides a significant premium to public unitholders, including a 12% premium over the previous day's closing price and up to a 23% premium over the 90-day volume-weighted average price.
• The all-cash offer provides liquidity and certainty of value for public unitholders.

Negatives

• The offer is non-binding, meaning there is no guarantee that a definitive agreement will be reached or that the transaction will be consummated.
• Discussions may be terminated at any time without prior notice.

Risks

• The transaction is subject to the negotiation of satisfactory definitive agreements.
• Completion requires approval from the KNOT Offshore Partners LP Board of Directors and its Conflicts Committee.
• Approval from the KNOT Board of Directors is necessary.
• The transaction is contingent on the satisfactory completion of due diligence.
• Approval by holders of at least a majority of the outstanding Common Units, Class B Units, and Preferred Units (on an as-if-converted basis), voting together as a single class, is required.
• The transaction is subject to customary closing conditions and the satisfaction of any conditions set forth in a definitive agreement.

Future Outlook

KNOT's non-binding offer indicates a potential take-private transaction for KNOT Offshore Partners LP. The future outlook for public unitholders depends on the successful negotiation of a definitive agreement and the satisfaction of various conditions, including board and unitholder approvals. KNOT intends to arrange fully committed financing for the acquisition.

Management Comments

• "On behalf of Knutsen NYK Offshore Tankers AS (KNOT), I am pleased to submit to you this non-binding proposal (this Proposal) regarding a possible transaction pursuant to which KNOT would acquire all of the outstanding common units (Common Units) representing limited partner interests of KNOT Offshore Partners LP (KNOP) not already beneficially owned by KNOT..."
• "KNOT intends to arrange for fully committed financing at the time of signing the Definitive Agreement with no financing contingency."
• "We are interested solely in acquiring Common Units of KNOP and are not interested in selling any of our equity interests in KNOP or pursuing other strategic alternatives involving KNOP."
• "This Proposal is not intended to, and does not, constitute or create any legally binding obligations or liabilities on the part of KNOT or any of its affiliates. A binding obligation of KNOT (or any of its affiliates) to effect the Transaction shall be created only upon the execution and delivery by KNOT and KNOP of a Definitive Agreement."
• "KNOT reserves its right to withdraw this Proposal at any time, for any reason, at its sole discretion."

Industry Context

This proposed take-private transaction for KNOT Offshore Partners LP reflects a potential consolidation or simplification of ownership structure within the specialized shuttle tanker segment. Such moves can be driven by a desire for greater operational control, reduced public company costs, or a belief that the public market is undervaluing the assets. The offer suggests KNOT sees strategic value in fully integrating KNOP's assets and operations, potentially indicating a stable or positive outlook for the shuttle tanker market, which is crucial for offshore oil and gas production.

Related Party Transactions

• KNOT, as the general partner and a significant unitholder, is proposing to acquire the remaining outstanding common units of KNOT Offshore Partners LP, making this a related-party transaction.

Stakeholder Impact

• Shareholders (public unitholders) stand to benefit from the proposed cash premium if the transaction is completed.
• KNOT and its affiliates would gain full ownership and control of KNOT Offshore Partners LP, allowing for greater operational and strategic flexibility.
• The transaction would result in KNOT Offshore Partners LP becoming a private entity, delisting its common units.

Next Steps

• The KNOT Offshore Partners LP Board of Directors is expected to delegate authority to a Conflicts Committee to evaluate and respond to the proposal.
• The Conflicts Committee is anticipated to engage independent legal and financial advisors.
• KNOT and KNOP would need to negotiate and execute a definitive merger agreement.
• KNOT intends to arrange fully committed financing for the transaction.
• The transaction requires approvals from the KNOP Board, Conflicts Committee, KNOT Board, and a majority of unitholders (Common, Class B, and Preferred on an as-if-converted basis).

Key Dates

Recommendation

The non-binding offer at a significant premium of $10 per unit suggests a favorable exit for current public unitholders. While the offer is not yet definitive and subject to various approvals and due diligence, the substantial premium makes it attractive. Investors currently holding units should hold to realize the potential upside if the deal closes. New investors might consider a 'buy' for arbitrage if the market price is below $10, but should be aware of the non-binding nature and associated risks. A 'hold' is prudent given the current stage of the offer.

Keywords

KNOT Offshore Partners LP, KNOT, Acquisition, Take-private, Common Units, Limited Partner Interests, Shuttle Tankers, SEC Filing, Schedule 13D, Beneficial Ownership, Merger Offer