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Boskalis Attempts HBG Takeover

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Sequence of events:



February 25, 2000. Boskalis announced its intention to make an offer for the shares of Hollandsche Beton Groep nv (HBG). Boskakis originally approached HBG on February 10 with a specific proposal to merge, and on that day officially announced its intention to announce the pricing of the intended offer and to invite HBG for further discussions within a week.



March 6, 2000. Royal Boskalis Westminster nv announced that Hollandsche Beton Groep nv (HBG) had not responded to Boskalis’ invitation for consultation within seven days, referred to in Clause 4, sub 2 of the Social and Economic Council Resolution on Rules of Conduct relating to Mergers 1975.



Boskalis stated that it would announce the pricing and other terms of its intended offer in the course of the week.



March 10. Royal Boskalis Westminster nv announced the pricing of its intended offer to the shareholders of Hollandsche Beton Groep nv. Boskalis announced its intention to make an offer for the ordinary shares of HBG on Friday, February 25. It is expected that the formal offer will be made after the advice of Boskalis’ Works council has been received.



Under the terms of the offer, Boskalis will offer 0.55 Boskalis shares (in the form of depository receipts) plus EUR 5.70 (NLG 12.56) in cash for each ordinary HBG share. At the closing price for Boskalis shares on March 9, the offer would value each ordinary HBG share at UEUR 18.60 (NOG 40.98), a premium of 69 percent, to the closing price on February 23, the day before Boskalis announced tat it was in discussions with HBG.



Boskalis informed HBG, the Amsterdam Stock Exchange, the relevant trade unions and the Merger Committee of the Netherlands’ Social and Economic Council of the pricing of the intended offer, and sought advice from its works council. HBG did not respond to the invitation dated February 25.



Terms of the offer were as follows: The offer will be made for all ordinary HBG shares, including the right to the HBG 1999 dividend. According to the commercial register, 43.6 million ordinary shares were in issue at he close of business on February 25. Sine that date, HBG has issued protective preference shares.



The new Boskalis shares to be issued under the offer will have the same rights as the existing Boskalis shares, including for the avoidance of doubt, the entitlement to receive the proposed dividend payable for 1999 or EUR 0.90 per share.



Boskalis believes the intended offer provides full and fair value to the HBG shareholders, not only in terms of immediate financial value, but through the opportunity to share in the future of the combined group.



The cash part of the offer will be paid from Boskalis’ existing cash resources and from new, committed banking facilities. If the offer is accepted by HBG shareholders representing 100 percent of the ordinary share capital currently in issue, Boskalis would issue in excess of 19 million new shares, representing approximately 42 percent of the total number of shares in issue after completion of the transaction.



The offer will be subject to certain conditions, customary for this type of transaction, which will be contained in the Notice of Offer. Boskalis will reserve the right to waive one or more conditions. The transaction will be filed with the EU competition authorities.



The formal offer and the Notice of Offer to shareholders, which will contain the full terms and conditions of the offer, is expected to be published in the course of the week beginning Marcy 20.



Robert van Gelder, CEO of Boskalis, said, “we believe that combining both businesses is unique opportunity to create a powerful international player. Together we will form a substantial construction and dredging group. The new company will have a substantial market position and a stronger capital base, offering an excellent platform for growth for both construction and dredging.



“The combination offers excellent opportunities for the personal development of the employees of both companies. HBG has solid market positions built as a result of the high quality and professionalism of the employees. Together with these employees, we want to expand these market positions. In dredging as well, the employees will benefit from extra opportunities for their development as a result of the larger scale. There will be no compulsory redundancies, and because of our volume of work in the coming years, we will need “all hands on deck.” One of the advantages of the merger is that we can achieve significant financial advantages without loss of jobs. WE have already informed our Works Council about our plans, and would like to present these as well to HBG’s Works Council.



This offer is in the best interests of the shareholders of both companies; it represents a substantial premium to HBG’s share price before the proposals were announced, and provides HBG shareholders with an attractive mixture of cash and Boskalis shares, enabling them to participate in the success of the enlarged group



“We continue to seek to convince HBG’s management of the benefits to both companies that this combination offers. WE hope management will recognize the advantages of our proposals and recommend the offer as being in the best interests of all their stakeholders.”



Boskalis, which has had a number of exploratory discussions with HBG in the past, approached HBG on February 10 with a merger proposal, which Boskalis believed would be highly attractive. Such a merger would create a sizeable international construction and dredging company, and considerable value for shareholders of both HBG and Boskalis. Following HBG’s decision not to purse such a route, Boskalis decided to make the proposal directly to the shareholders.



Boskalis believes that the case foe combining the two businesses is compelling, strategically, operationally and financially, and that it is in the best interests of both sets of shareholders and employees. Boskalis will continue to seek HBO’s support for these proposals.



The combined group would have estimated turnover in excess of EUR 5.5 billion (NLG 12.0 billion), operations in more than 50 countries across five continents, and approximately 25, 000 employees. It would become one of the best-positioned European companies in “dry and wet” infrastructure and other construction.



Boskalis anticipates that the transaction will considerably enhance earnings per share immediately. It expects that as a result of both the transaction and organic growth, earnings per share in 2000 would be 30 percent higher than in 1999 and that earnings per share would double over the next three years.



Strategic Benefits of the Merger



1. the creation of a leading international construction and dredging group,



2. enhanced financial strength of the combined group, forming a strong base for further development and expansion;



3. The creation of substantial synergies and other benefits in the dredging business in terms of market position, cost efficiencies, quality of staff and organization and composition and deployment of the fleet. Considerable savings will be realized on future investments. Boskalis estimates the structural cost savings will rise to a minimum of approximately EUR 13.5 million (NLG 20 million) per annum beginning in 2002, and estimates savings on capital expenditure of approximately EUR 135 million (NLG 200 million) in the next three years.



On March 10, Boskalis announced its results for the year ended December 31, 1999.



Net profit increased 22 percent to EUR 57.5 million on turnover that rose six percent to EUR 851 million. The eight home markets performed strongly with turnover increasing nine percent. Earnings per share grew 22 percent to EUR 2.22. The proposed dividend for the year 1999 increases 23 percent to EUR 0.90



HBG is a European construction and dredging group that undertakes international projects, and specializes in all aspects of construction as well and dredging and industrial activities. Headquartered in Rijswijk, the Netherlands HBG employees about 22,000 people, with operations in the Netherlands, the United Kingdom, Ireland, Germany and the United States. In 1998, GBH had a turnover of EUR 4,732 million (NLG 10,427milllion) and EGITDA (earnings before interest, tax, depreciation and amortization) of EUR 172 million (NLG 379 million.) Its market capitalization at the close of business on March 9 amounted to approximately EUR 509 million (NLG 1121 million.)



Boskalis is a leading international dredging company whose core activities are 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 has a fleet of more than 300 units, operates in 50 countr9ies in five continents, and employs more than 3000 people. Its headquarters are in Papendrecht, the Netherlands.



March 23: Royal Boskalis Westminster nv has taken notice of the decision in summary proceedings by the president of the Dordrecht District Court, ruling that Boskalis may not make an offer on the shares of HBG prior to May 15, 2000. Consequently, Boskalis suspends making an offer for the HBG shares, and will make further announcements on May 15.



Boskalis remains convinced of the substantial benefits of a merger with HBG, and remains available for discussions with GHB management to jointly come to a merger of the two companies.


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