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Boskalis and HBG Agree to Merge

Papendrecht, Rijswijk, The Netherlands – Royal Boskalis Westminster nv and Hollandsche Beton Groep nv (HBG) will effect a merger of equals pending a vote by shareholders in August, according to a joint press release issued on May 15 by the two companies.

Based on the respective closing prices on May 12, 2000, the market capitalization of the combined company will be approximately EUR 1.2 billion (NLG 2.5 billion, US$1.1 billion.) On a pro forma basis, the new company had a 1999 turnover of EUR 5.8 billion (NLG12.8 billion; US$5.6 billion.)

The new company will have approximately 23,000 employees in more than 50 countries across five continents, and will be one of the best-positioned European construction and dredging companies. The HBG dredging arm is HAM Dredging and Marine Contractors, operating 57 dredges of all descriptions from main offices in Rotterdam and from 21 international offices. Boskalis has 67 dredges operating from 49 international offices besides their main office in Papendrecht, the Netherlands. HBG’s main office is in Rijswijk, the Netherlands.

Besides dredging, the new company will be active in dry infrastructure, housing and building, consultancy and engineering as well as industrial contracting.

Both companies will be merged into the new company by way of a statutory merger. This new company will have the usual Supervisory Board and Board of Management structure, and will be 50 percent owned by Boskalis shareholders and 50 percent owned by HBG shareholders. As a result of the merger, the listings of the Boskalis share certificates and the HGB shares will be terminated. The parties will ensure that, prior to these terminations, a listing of the shares in the new company will be obtained on the Amsterdam Stock Exchange (AEX.)

The transaction, the details of which will be published in due course, will be subject to approval of the shareholders of both companies at Extraordinary General Meetings. The Merger Memorandum to the shareholders, which will contain the full terms and conditions of the merger, is expected to be published at the end of June 2000. Boskalis has been offering a buyout of HBG since March of this year, with the initial proposal offering HBG shareholders a 40 percent interest in the new company. The current proposition is a better proposition for HBG, offering a 50 percent share.

The competition authorities of the European Union and the United States will be notified of the transactions. Boskalis and HBG have informed the Amsterdam Stock Exchange, the relevant trade unions and the Merger committee of the Social and Economic council of the Netherlands of the intended merger. The representative councils of both companies will be informed or consulted for advice, as applicable.

R. van Gelder, chairman of the Board of Management of Boskalis, explained the strong strategic, financial and operational rationale of the transaction.

“This merger offers excellent prospects to our combined stakeholders. The strong positioning of the combined company is in the interest of our shareholders, our employees and our customers,” he said.

J. Veraart, president of the Board of Management of HBG, emphasized the strong basis of trust that exists between the managements of both companies.

“We have jointly created a balanced framework for our employees to further develop the great opportunities of both companies.”


Among other things, the merger offers:

--creation of a large international construction and dredging group with excellent possibilities for further development and expansion of its core activities;

-- creation of substantial synergies and other advantages in the dredging activities in terms of market positioning, cost efficiencies, quality of staff and organization, and composition and deployment of the fleet. In addition, considerable savings will be realized on future capital expenditure. Boskalis and HBG estimate that the structural cost savings amount to a minimum of approximately EUR 13.5 million (NLG 30 million; US$13.1 million) by the year 2002. The savings on capital expenditure are estimated to be approximately EUR 135 million (NLG 300 million; US$131 million;) over the next three years.

__ Enhanced financial strength as a strong base for further development and expansion of the core activities, also by participating in privately financed projects and through the development of higher margin construction-related services.

The new company expects to realize 20 percent annual growth of earnings per share in the coming years.


The company will have a Board of Management, which will initially consist of Rob van Gelder of Boskalis and Jan Veraart of HBG, P.A.M. Berdowski, C.J.A. Reigersman and K.K. Troost. Veraart and Van Gelder will jointly preside over the Board of Management. D. Sinninghe Damesté, a member and vice president of the Board of Management of HBG, who has promoted this merger for a long time, will retire some months before reaching the normal retirement age.

The Supervisory Board of the new company will have 10 members, five from the Supervisory Board of Boskalis and five from the Supervisory Board of HBG. R.J. Nelissen will be appointed chairman of the Supervisory Board, and A.A. Loudon will be vice chairman.

As soon as possible after the merger, the dredging companies of Boskalis and HBG will be integrated into one company, managed by D. de Waard, (a member of the Board of Management of HBG) as board chairman, and K.G. van Nes, L. Vellekoop (board members of Boskalis,) R.T. Berends and J. van Herwijnen as board members.

HBG is a European construction group that works internationally in all aspects of construction, as well as in dredging and industrial contracting. The company’s head office is in Rijswijk. HBG has approximately 20,000 employees and operations in the Netherlands, Belgium, the United Kingdom, Ireland, Germany and the United States. In 1999, HBG had a turnover of EUR 4,997 million (NLG 11,012 million; US$4.808 million) and a net profit of EUR 63 million (NLG 138 million; US$60.3 million.)

Boskalis is an international dredging contractor with core activities in the construction and maintenance of ports and waterways, land reclamation, coastal defense and riverbank protection. With nine significant home market positions in and outside of Europe, the company covers all market segments in dredging. Boskalis operates in approximately 50 countries across five continents, and employs more that 3000 people. In 1999, Boskalis achieved a turnover of EUR 851 (NLG 1,875 million; US$818.8 million) and a net profit of EUR 58 million (NLG 127 million; US$55.5 million.)

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