HBG and Ballast Nedam merge dredging activities
- Leading player in international dredging market
- Good starting position for further growth
- New company Ballast HAM Baggeren bv (Ballast HAM Dredging) expects a turnover in 2001 of 635 million euros and has a workforce of approximately 2,000
- HBG to hold 2/3 of the shares, Ballast Nedam 1/3
- Fleets complementary, substantial synergy benefits
- Better positioning for major infrastructure works (dredging + construction)
- Attractive employer
- Creation shareholder value for HBG and Ballast Nedam
Ballast Nedam and HBG will merge their dredging activities into a new joint venture that will be made up of Ballast Nedam Baggeren bv (BNB) and Hollandsche Aanneming Maatschappij bv (HAM). Ballast Nedam and HBG have signed a memorandum of understanding, as a result of intensive negotiations conducted in recent months. The Boards of Management and Supervisory Boards of HBG and Ballast Nedam, as well as the management of both dredging companies fully support the joint venture.
A combined trailing suction hopper dredger capacity of 160,000 m3 and a combined capacity in heavy cutter suction dredgers of 66,000 kW will make the new joint venture world market leader in important segments of the dredging industry. The new company – Ballast HAM Baggeren bv – will operate on a stand-alone basis, will be self-financing and will have a strong balance sheet, which offers an excellent starting point for further strengthening the market position.
Strategic reasons for joining forces
The merger of the two companies’ dredging activities will create an operation of sufficient mass to play a prominent role in a consolidating dredging industry.
After a careful evaluation of the various strategic options open to both companies, Ballast Nedam and HBG came to the conclusion that the proposed merger of their dredging activities would be in the best interest of shareholders, employees and other stakeholders of the two companies.
The new joint venture will lead to considerable synergies and advantages:
- Strengthened market positions: the fleets complement each other, placing the new company in a better position in its home markets and on major projects;
- Considerable capital expenditure savings: combining the fleets means that a number of major investments in new vessels that had been planned (including the already announced jumbo-hopper HAM 321) will not need to be made for the time being. This concerns capital expenditure amounting to more than 200 million euros during the next three years;
- Substantial cost savings: Ballast HAM Baggeren expects to generate significant cost savings with regard to the composition and deployment of the fleet, operational efficiency, merging of regional and head offices and better deployment of human resources;
- Retention of synergies with construction activities of the parent groups: since the dredging and construction activities of Ballast Nedam and HBG will continue to be closely associated – the parties involved already frequently find themselves working together on major joint venture projects – Ballast HAM Baggeren, Ballast Nedam and HBG will be even better positioned for major multidisciplinary civil engineering projects;
- Attractive to employees: the joint venture will be an attractive employer and will be able to offer greater scope for career development within its own organisation as well as with the parent companies.
These synergies and advantages will result in a significantly larger profit potential for HBG and Ballast Nedam and will lead to an increase of shareholder value.
Structure of the transaction
Ballast Nedam is to transfer its shares in BNB to HAM in exchange for 1/3 of the shares of HAM. The new name will be Ballast HAM Baggeren bv. HBG will receive a dividend payout of 91 million euros from HAM. Ballast Nedam’s interests in the North American market in North American Trailing Company and Natco Limited Partnership (together known as Natco) are not included in the transaction at this stage.
As part of the transaction, Ballast Nedam is to obtain a put option giving the company the right to sell its interest in the new joint venture to HBG.
The new Ballast HAM Baggeren joint venture
The combination of BNB and HAM will create a strong dredging company with substantial positions in its home markets and on major long-term projects. In the preceding financial year, Ballast HAM Baggeren achieved a pro forma turnover of 558 million euros. The joint venture will have approximately 2,000 employees. In 2001, Ballast HAM Baggeren expects to achieve a turnover of around 635 million euros.
Organisation and management
On completion of the merger of the dredging activities, Ballast HAM Baggeren will have a Board of Directors of five members, three of whom (including the chairman) will come from HBG and two from Ballast Nedam. Mr Daan de Waard – currently member Board of Management of HBG – will be appointed as chairman of the Board of Directors. The head office of Ballast HAM Baggeren will be located at a new address yet to be decided.
The Supervisory Board of the new joint venture will be made up of five members, three of whom (including the chairman) will be appointed by HBG and two by Ballast Nedam. Important strategic decisions will require unanimous approval or a qualified majority.
It is expected that there will be no forced redundancies as a result of the formation of Ballast HAM Baggeren.
The Social and Economic Council Committee for Merger Affairs ('SER'), Euronext Amsterdam N.V., the employee councils and the unions involved have been advised of the transaction. The transaction will also be reported to the relevant competition authorities.
It is expected that the transaction can be completed by the middle of this year, after a final due diligence investigation and clearance by the relevant authorities.
Ballast Nedam is being advised in this matter by ING Barings; HBG by ABN AMRO Bank and Lazard Frères.
Profiles of HBG and Ballast Nedam
HBG, Hollandsche Beton Groep nv, is an international contracting group carrying out projects worldwide and specialising in all aspects of construction as well as dredging and engineering activities. HBG has approximately 20,000 employees and occupies prominent positions in Europe (the Netherlands, Belgium, Germany, Ireland and the United Kingdom) and the United States. In 2000, HBG achieved a turnover of 5.4 billion euros.
Ballast Nedam nv is an international construction and dredging group with activities spanning the entire spectrum of the construction process. Ballast Nedam has approximately 7,300 employees. The company thus ranks among the larger construction groups, both nationally and internationally. From its home market in the Netherlands, Ballast Nedam has built up a strong position in the United Kingdom, South-East Asia, the Caribbean and the Middle East. In 2000, Ballast Nedam achieved a turnover of 2.1 billion euros.
Hollandsche Beton Groep nv:
- Arno Pronk, telephone +31 70 3722121
Ballast Nedam nv:
- Jos Bolt, telephone +31 20 5453426
- Nel de Geus, telephone +31 20 5453435