7 firms supporting Renaissance | Ballast Nedam deal

17 September 2015 Consultancy.uk

Ballast Nedam continues to be in talks with Renaissance Construction about a possible takeover of the Dutch construction firm. The takeover bid placed in July by Renaissance has however been significantly reduced over the past four months, to 20% of the original bid. Poor results posted by Ballast Nedam’s infra-division and other construction projects are cited as the cause. Seven external advisories are currently involved in the deal between the construction companies: ABN AMRO, Deloitte, Clifford Chance, KPMG, Leonardo & Co, Stibbe and De Brauw Blackstone Westbroek.

Listed on the Euronext Amsterdam stock exchange, Ballast Nedam ranks among the five largest construction companies in the Netherlands, after BAM, VolkerWessels, Heijmans and TBI. The construction firm has struggled over recent years with a sluggish construction market. Late last year Ballast Nedam reported disappointing results, which saw the group forced to implement a restructuring programme in a bid to stabilise its finances. The programme resulted in around 150 job cuts and stood at the basis of the divestment of various business units (CNG Net, LNG24, CNG Net Production and Maintenance).

Ballast Nedam - Renaissance Construction

The prospect of a takeover by the Turkish construction company Renaissance Construction has hung over Ballast Nedam for a number of months now. Set up in 1993 in St. Petersburg by the current CEO Erman Ilicak, the Turkish construction company develops and builds a wide variety of projects including shopping centres, offices, hotels, flat buildings, industrial facilities, industrial projects and a diverse range of miscellaneous infrastructure projects, in among others, the developing Middle East and Russian markets.

In July this year, the Turkish company took a 20% stake in Ballast Nedam, and a month later it added a further 5% share. In recent months, Ballast Nedam held talks with the Turks on a complete takeover of the construction company. In July, after an extensive due diligence, a bid of €1.55 per share was put on the table. Recently it emerged from a press release that the initial bid has been negotiated down five times. Earlier stipulated sales conditions, have also been altered downwards, such as the ban on the sale of Ballast Nedam business units after the acquisition.

Ballast Nedam’s particularly disappointing results from various infrastructure and construction projects as well as the additional losses the company is expected to post in the future, have resulted in the large reduction in bid value from Renaissance. The current offer now stands at €5.8 million, 80% down from the original €30 million offer.

Ballast Nedam - Renaissance Construction - dealmakers

Whether the acquisition will be successfully closed depends on the ongoing negotiations between Ballast Nedam and Renaissance Construction. Seven external independent parties (banks, consultancies and law firms) are involved in supporting the negotiations. ABN AMRO and accountancy and consultancy firm Deloitte are providing buyer Renaissance Construction with financial advice, while legal advice comes from law firm Clifford Chance. Seller Ballast Nedam is assisted by a deal team including KPMG, investment bank Leonardo & Co and law firms Stibbe and Brauw Blackstone Westbroek.

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