Royal BAM NBM acquires HBG from Grupo Dragados

Koninklijke BAM NBM nv herewith announces that the expectation is justified that it will be able to reach agreement with Grupo Dragados, S.A. on the acquisition of Hollandsche Beton Groep nv 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.

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 am

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