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11 June 2002
Royal BAM NBM acquires HBG from Grupo Dragados
Joint press release by Royal BAM NBM nv and Hollandsche Beton Groep nv
The expectation is justified that Royal BAM NBM and Grupo Dragados will
reach agreement on the acquisition of HBG by Royal BAM NBM
The proposed acquisition of HBG by Royal BAM NBM is unanimously supported
by the Executive Board and the Supervisory Board of HBG
Royal BAM NBM intends to acquire all of the shares in HBG held by Grupo
Dragados for EUR 20.10 per share in cash, implying an equity value of
EUR 715 million for the whole of HBG
The acquisition strengthens Royal BAM NBM’s position as market leader
in the Benelux and adds important Western-European markets and the USA
The new combination is one of the top 10 construction companies in Europe
with a pro forma turnover of EUR 8.5 billion for the year 2001
Royal BAM NBM expects that the proposed acquisition will have an immediate
positive effect on its earnings per share before and after goodwill amortisation
Royal BAM NBM will consult its shareholders in an extraordinary general
meeting of shareholders to be held in the first half of July
Koninklijke BAM NBM nv (“Royal BAM NBM”) herewith announces
that the expectation is justified that it will be able to reach agreement
with Grupo Dragados, S.A. (“Grupo Dragados”) on the acquisition
of Hollandsche Beton Groep nv (“HBG”) by Royal BAM NBM. The
intended acquisition of HBG is unanimously supported by the Executive
and Supervisory Boards of Royal BAM NBM and HBG.
Strategic rationale
Royal BAM NBM is convinced of the strategic fit between the activities
of HBG and Royal BAM NBM. HBG represents a unique opportunity to further
accelerate expansion of Royal BAM NBM’s presence in the Benelux market
and obtain critical mass in important Western-European markets and the
USA. The combination of Royal BAM NBM and HBG creates added value by combining
the knowledge base and experience of both companies.
HBG has extensive know-how and experience for example in large infrastructure
projects, tunnelling, private financing and facility management which
are partly complementary to Royal BAM NBM’s business. As a result
of the transaction Royal BAM NBM will substantially increase its market
position as it will be able to realise large projects outside its current
home markets (Benelux). HBG’s building, property development and
infrastructure activities will not only further strengthen Royal BAM NBM’s
position in the Benelux but will also add strong market positions in the
United Kingdom, Ireland, Germany and the USA. Furthermore, through HBG’s
two-third stake in Ballast Ham Dredging, Royal BAM NBM obtains a top position
in the world-wide dredging market.
Transaction structure
Royal BAM NBM will acquire all outstanding shares of HBG currently held
by Grupo Dragados for EUR 20.10 per share in cash. With this, Royal BAM
NBM has taken into account a level of provisions it deemed advisable.
The price per share may be increased by EUR 1.15 to EUR 21.25 if HBG’s
net profit from its construction and infrastructure activities exceeds
EUR 100 million for the year 2002. This earn-out will be self-financed.
Grupo Dragados has not and will not receive any dividend payment from
HBG.
After completion of the transaction, Royal BAM NBM will acquire the remaining
shares of HBG not held by Grupo Dragados (c. 0.3%) through open market
purchases or a minority buy-out procedure.
The new combination of Royal BAM NBM and HBG
The acquisition of HBG by Royal BAM NBM will create a large construction
group with a strong presence in Western Europe and a combined order portfolio
of EUR 10.7 billion as at 31 March 2002. For the year ending 31 December
2001, the new combination would have realised a pro forma turnover of
EUR 8.5 billion, an operating profit before goodwill of EUR 171 million
and a net profit from ordinary activities before goodwill of EUR 105 million.
The new combination will employ approximately 32,000 people and will be
market leader in the Benelux and have a top 10 position in Europe.
The new combination has positions for 18,000 houses and 550,000 square
meters of commercial property in the Netherlands.
Large, high profile projects of both companies include the High Speed
Link (HSL), Betuweroute, Westerscheldetunnel, WTC Amsterdam, Amsterdam
Zuidas and Zuidoost, Hall of Justice in Antwerp, Munich airport, the Carquinez
bridge in San Francisco and the Channel Tunnel Rail Link.
Financing
The transaction will be financed by means of a bridge facility and by
available cash resources of Royal BAM NBM. Royal BAM NBM intends to refinance
the bridge facility as soon as possible after completion of the acquisition.
For this purpose Royal BAM NBM will examine all financing options including
ordinary shares, preference shares, convertibles and other debt instruments,
to ensure the optimal financing package. Royal BAM NBM envisages that,
following the refinancing, the enlarged group will have adequate solvency.
Profit forecast
On a stand-alone basis, Royal BAM NBM expects an increase in net earnings
both in 2002 and 2003. The intended acquisition will lead to an immediate
increase in earnings per share, both before and after goodwill amortisation.
Organisation and management of the new combination
Royal BAM NBM intends to expand its Executive Board to comprise:
W. van Vonno PhD - Chairman*
C.J.A. Reigersman - Vice-Chairman**
A.J.D. Franklin, BEng, CEng, FICE, FCIOB, FIHT**
G.H. Hoefsloot**
J.A.P. van Oosten*
N.J. de Vries*
* Royal BAM NBM
** HBG
Furthermore, it is Royal BAM NBM’s intention to request R.J.N. Abrahamsen
and M.I. Platschorre, currently part of HBG’s Supervisory Board,
to join its Supervisory Board.
Royal BAM NBM will combine the activities of Royal BAM NBM and HBG at
holding level. At operating level, the integration of Royal BAM NBM’s
and HBG’s activities will initially be focused on the coordination
of activities between Royal BAM NBM and HBG in markets where both companies
currently have operations. This means only the Netherlands and Belgium.
The head office of the combination will be situated at a new location
in the region of Utrecht.
Employees
Royal BAM NBM does not expect that current levels of employment will be
affected as a result of the proposed transaction as such. Moreover, Royal
BAM NBM is of the opinion that the new combination will provide an excellent
working environment for all employees of Royal BAM NBM and HBG. Based
on the strength of the new combination and Royal BAM NBM’s past experience
with integration processes, Royal BAM NBM is confident that the new combination
will remain an attractive employer for both Royal BAM NBM’s and HBG’s
employees.
Next steps
Royal BAM NBM expects to make the necessary filings with the relevant
competition authorities as soon as possible. Parties are confident that
the required clearance from the competition authorities will be obtained.
The Social and Economic Council Committee for Merger Affairs (‘SER’),
Euronext Amsterdam and the relevant works councils and trade unions of
Royal BAM NBM and HBG have been informed. The relevant works councils
will be asked to render their advice on the proposed transaction.
Royal BAM NBM will consult its shareholders with respect to the transaction
in an extraordinary general meeting of shareholders, which the company
expects to hold in the first half of July.
Royal BAM NBM expects to close the transaction in early August 2002.
Profile of Royal BAM NBM
Royal BAM NBM initiates projects and develops, builds and maintains structures
and installations for living, working, transport and recreation. Royal
BAM NBM operates through various operating companies which are organised
into four divisions: BAM NBM Bouw, BAM NBM Vastgoed, BAM NBM Infra and
BAM NBM Techniek. Royal BAM NBM is the leading construction company in
the Benelux with its head office located in Bunnik, the Netherlands. In
2001, Royal BAM NBM realised a turnover of EUR 2.9 billion and a net profit
before goodwill amortisation of EUR 44 million. Royal BAM NBM employs
c. 13,000 people.
Profile of HBG
HBG is a European construction company executing projects world-wide and
focussing on all aspects of construction as well as dredging activities
and consultancy and engineering. HBG’s head office is located in
Rijswijk, the Netherlands. HBG employs about 19,000 people and holds top
positions in con-struction and infrastructure markets in the Netherlands,
Belgium, UK, Ireland, Germany, the USA and the dredging market world-wide.
For 2001, HBG achieved turnover of EUR 5.6 billion and a net profit from
ordinary activities before goodwill amortisation of EUR 61 million.
Further information
Royal BAM NBM nv:
W. van Vonno: +31 30 659 8383
Appendix: pro forma overview 2001 of Royal BAM NBM including HBG
Pro forma combined divisional breakdown of 2001
sales:
(x € million)
Construction & Property 4,300
Infra 3,619
Dredging 480
Mechanical / Electrical contracting 176
Consultancy and Engineering 141
Other 4
Total 8,720
Less: intercompany sales (187)
Total 8,533
Pro forma combined geographical breakdown of 2001
sales:
(x € million)
The Netherlands 4.316
United Kingdom 1.709
Germany 932
USA 450
Ireland 370
Belgium 298
Other countries 645
Total 8.720
Less: intercompany sales (187)
Total 8.533
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