sweco acquires grontmij creating the leading european ... · occur in the future, many of which are...

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Sweco acquires Grontmij

Creating the leadingEuropean engineeringconsultancy

Sweco will make a recommended public offer to buy allshares in Grontmij. In other words: Sweco and Grontmijwill combine to form the leading engineeringconsultancy on the European market. We are taking amajor step towards becoming Europe’s most respectedcompany in the industry. Not just in sales – but moreimportantly as the first choice for customers, employeesand other stakeholders.

WHY COMBINE?Because Sweco and Grontmij are anexcellent fit – geographically,operationally and culturally.Together, Sweco and Grontmij willhave a consolidated leadershipposition in the Northern Europeanmarkets. We will have an unrivalledbase of competence, and be able totake on the industry’s most complexand challenging projects.

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Today’s topics

• Introduction• Sweco in brief• Grontmij in brief• The combined company• The transaction

Creating the leading European engineering consultancyCreating the leading European engineering consultancy

Disclaimers

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By attending the meeting where this presentation is made, or by reading the slides, you agree to be bound by thefollowing limitations.This presentation is being supplied to you solely for your information and use as of the date of today. The informationmay be subject to updating, completion, revision and amendment and such information may change materially. Norepresentation or warranty, express, or implied is or will be made by Sweco or any other person as to the accuracy,completeness or fairness of the information or opinions contained therein and any reliance you place on them will be atyour sole risk. Without prejudice to the foregoing, neither Sweco, its associates, or any other person accept any liabilitywhatsoever for any loss howsoever arising, directly or indirectly, from the use of this presentation or its contents orotherwise arising in connection with this presentation.This presentation includes statements that are forward-looking in nature. By their nature, forward-looking statementsinvolve risks, uncertainties and assumptions because they relate to events and depend on circumstances that willoccur in the future, many of which are beyond our control and are provisional only and for indicative, preliminary andillustrative purposes only. Actual results and developments and projected or targeted results may differ materially fromthose expressed in such statement and from historical trends, depending on a variety of factors. Such factors maycause actual results and developments to differ materially from those expressed or implied by these forward-lookingstatements. However we believe that the expectations reflected in such forward looking statements are based onreasonable assumptions. Sweco expresses no view, estimate or assessment whatsoever on the likelihood that targetswill be achieved. Sweco reserves the right, but does not have any obligation, to amend or change projections,assumptions or targets if it deems it appropriate to do so.This presentation contains certain non-IFRS financial measures. These financial measures may differ from similarlytitled measures used by other companies. This presentation contains information sourced from third parties about themarkets in which the Company competes, including market growth, market size and market segment sizes. There isno guarantee that this information is accurate or complete and not misleading.

Creating the leading European engineering consultancy

Creating the leading Europeanengineering consultancy

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• Sweco will make a recommended public offer for all ordinary shares in Grontmij

• Leveraging a near-perfect fit: geographically, operationally and culturally

• Value creation through operational improvements

• Establishing new growth platforms in the attractive Northern European region

• Strengthening the value proposition to customers

• Developing and attracting key talent

Taking a major step towards becoming Europe’ smost respected company in our industry


A new market leader

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Note 1) Excluding France 2) Aecom 2014Q3 LTM, URS FY2013

European turnover (FY 2014, EUR bn)

1.2

1.7

0.7

0.7

1.1

1.1

0.9

0.9

Ramböll

COWI

Aecom + URS2

Fugro

Grontmij1

Arcadis

Mott MacDonald

Atkins

Sweco

ÅF

Sweco

0.9

1.0

0.9


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Geographical footprint

• #1 on the European market – leadingpositions in 6 individual countries

• A consolidated footprint that enables”Proximity governance”

• Cultural similarities and potential forcross border cooperation

• Potential to leverage strong cash flowfrom the Nordics to pursue strategicopportunities in Northern Europe


#1

#3

#3

#1

#3

#2

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Today’s topics



Sweco in brief

• #1 in the Nordics

• #4 on the European market

• 8,500 employees

• Total sales of EUR 1.0 billion


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Sweco plans and designs thecommunities and cities of the future

Design the world’s mostmodern bio product mill for

Metsä Fibre

Architectural design andengineering at the ESS

research facility

Planning and designinglight-rail in Bergen


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Detailed design of the City ofPrague’s water supply system

Design new metro line inStockholm

Long term and profitable growth

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Net sales Operating profit

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03 04 05 06 07 08 09 10 11 12 13 14 150

100

200

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03 04 05 06 07 08 09 10 11 12 13 14 15

Q4Q3Q2Q1

SEK M SEK M

CAGR 14% CAGR 21 %


~ 100 firms successfully acquired and integrated in past decade

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Today’s topics



Grontmij in brief

• Strong European presence

• Approximately 6,0001 employees• Total sales of EUR 0.71 billion

1) Excluding operations in France


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Grontmij makes a lasting contribution toa changing world

Improve national road network

Converting Skearbaeck powerstation into a fully sustainable

power station

Improve Ring road Antwerp

Preparation comprehensiveflood risk management plan for

Poland

Installation of world’s largestwaste-water heat pump

Making the energy networkready for a sustainable

future


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Long and proud history, recent challenges

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• ‘Back on Track’ strategy since 2012

• Continued challenges remained─ Unfavorable market situation, especially in the Netherlands─ Consequences of problematic acquisition France

• Long term strategic challenge─ Need for investments in growth and future operational improvements─ Grontmij lacks the financial strength


Over the past year, Grontmij reviewed itsstrategic options

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Start strategic review:all options open

Acquisition by astrong partnerselected

Q1 Q2 Q3 Q4 Q1 Q2

Discussionswith selectedparties

Intensifieddiscussions

Sweco offeracceptable toproceed

Reciprocal Duediligence

MajorShareholderssupport

2014 2015Today

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Today’s topics




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• Accelerate strategies

• Acquisition-driven growth

• Operational improvements

• Unrivalled competence base

Company high-lights

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Strengthening the value proposition tocustomers

• Unrivalled competence base

• Ability to take on the most complex andchallenging projects

• Complementary competences


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Developing and attracting key talent

• Strengthened ability to attract key talent

• Even more opportunities fordevelopment and growth

• Part of a high performing organization


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Today’s topics



Key terms of the offer

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• Sweco will make a recommended public offer for all outstanding shares in Grontmij─ Recommended by Grontmij’s Executive Board and Supervisory Board─ Irrevocably committed by shareholders for 45% of the share capital of Grontmij

• EUR 1.84 in cash plus 0.22195 Sweco B shares per Grontmij share─ Valued at EUR 4.66 per Grontmij share based on May 29 closing price─ Total equity value of Grontmij EUR 354 million

• Represents a compelling offer to Grontmij shareholders─ 21.7% premium to May 29 closing price of EUR 3.83─ 2015 Q1 LTM EV/EBITDA adj. 14.1x─ Further potential from value creation of the combination


Projected mid-term financial effects

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• EUR 271 million annually from synergies and operational improvements─ ~ 50% from synergies (HQ, IT, Sweden)─ ~ 50% from accelerated operational improvements

• 90% of synergies and operational improvements realized in the first fouryears after completion

• Additional upside from utilization of tax losses and lower financing costs

• EUR ~50 million in one off costs impacting EBITA

• EPS accretive latest in second year after completion

Note 1) Compared to 2014 cost base line


Financing

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• 61% of offer in equity (EUR 214 million) – Financed through issuance of newshares

• 39% of offer in cash (EUR 140 million)

─ Initially financed through a bridge facility

─ Rights issue post settlement to largely take out the bridge facility

• Certainty of funds─ Rights issue irrevocably committed by Sweco’s two largest shareholders

representing 45% of the economic rights in Sweco─ Fully committed debt financing for the combined entity

Integration plan and principles

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• Joint company to be headquartered in Stockholm, listed on Nasdaq OMX

• The new company will have the Sweco name and brand

• Business structure based on geographies – Sweco’s Executive Team isexpanded with three new members from Grontmij

• Current Grontmij country management will remain in position – key staffmanagers will be offered positions in new organization

• Grontmij’s executive board will step down and support the integrationprocess

• Combining best practices and competencies - best person for the jobprinciple used in cases of overlap

• Work with joint integration plans to be commenced immediately


Indicative timetable

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Launch of the Offer / publication of offer memorandum July 2015

EGM Sweco August 2015

EGM Grontmij August 2015

Closing of the acceptance period September 2015

Rights issue 2015


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Near-perfect fit

Value creation through synergies and operationalimprovements

Strengthened value proposition to customers

Enhanced opportunities for employees


Appendix

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Summary

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Near-perfect fit

Value creationthrough profitimprovements

Strengthenedvalue proposition

to customers

Enhancedopportunities for

employees

• Highly complementary geographic footprints in an attractive region• Benefits of similar governance models and culture• Solid platform for growth in Northern Europe

• EUR 27 million in annual synergies and operational improvements• EPS accretive in the second year after closing• EUR 50 million integration cost impacting EBITA

• Unrivalled competence base – enhanced ability to serve customers• Ability to take on the most complex and challenging projects• Complementary competences

• Strengthened ability to attract key talent• Expanded resources and international reach enhance

opportunities for employee development and growth• Part of a high performing organization


Key offer conditions

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• Key offer conditions─ Statutory squeeze-out will be initiated if 95% of the outstanding shares are acquired─ If 80% of the outstanding shares are acquired a cross-border merger is pursued─ Approval from the relevant antitrust authorities, works council and trade unions─ Divestment of France─ Sweco shareholders to approve the transaction and issuance of new shares

• Deal protection─ Competing offer threshold: 9%, subsequent 4.5%─ Two-way break fee 0.85% of total offer consideration

• Full certainty of funds with committed documentation in place

• Irrevocables from two main Sweco shareholders (56% of voting rights) – Committed to vote infavor of all resolutions required and to pro rata participate in rights issue

• Irrevocably committed by Grontmij largest shareholders for 45% of the share capital of Grontmij


Key financials

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FY 2014 (EURm) Grontmij1 Sweco Combined

Total sales 659.1 1,012.9 1,672.0

EBITDA 17.7 106.1 123.8

% margin 2.7% 10.5% 7.4%

EBITA excluding e/o items 22.7 89.5 112.2

% margin 3.4% 8.8% 6.7%

Employees (FTEs) 6,000 8,500 14,500

Employees (headcount) 6,500 9,000 15,500


Exchange rate SEK/EUR 9.0968 (average 2014)Note: Grontmij financials excluding France1) Grontmij accounts adjusted to follow the Sweco P&L definitionsSource: Annual accounts of Sweco and Grontmij, Sweco analysis

Key financials

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FY 2014 (SEKm) Grontmij1 Sweco Combined

Total sales 5,995.8 9,231.7 15,209.5

EBITDA 161.0 964.8 1,125.8

% margin 2.7% 10.5% 7.4%

EBITA excluding e/o items 206.1 814.5 1020.6

% margin 3.4% 8.8% 6.7%

Employees (FTEs) 6,000 8,500 14,500

Employees (headcount) 6,500 9,000 15,500

Exchange rate SEK/EUR 9.0968 (average 2014)Note: Grontmij financials excluding France1) Grontmij accounts adjusted to follow the Sweco P&L definitionsSource: Annual accounts of Sweco and Grontmij, Sweco analysis


Sweco largest shareholders

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Shareholder A-shares B-shares Total Number ofShares Votes % Holding %

Familjen Nordström 5,197,116 8,813,927 14,011,043 34.39 % 15.16 %

Investmentaktiebolaget Latour 1,222,760 27,775,000 28,997,760 22.63 % 31.38 %

Richerts Minne, Stiftelsen J Gust 1,769,420 168,511 1,937,931 10.11 % 2.10 %

Nordea Investment Funds 10,000 3,989,555 3,999,555 2.31 % 4.33 %

Lannebo fonder 0 4,001,569 4,001,569 2.26 % 4.33 %

JPM CHASE NA 0 3,856,030 3,856,030 2.18 % 4.17 %

Swedbank Robur fonder 0 3,224,209 3,224,209 1.82 % 3.49 %

Öhman, Anders 250,000 200,000 450,000 1.53 % 0.49 %

Odin Sverige AksjefondetT 0 2,080,879 2,080,879 1.18 % 2.25 %

KAS Bank Client ACC 0 1,998,744 1,998,744 1.13 % 2.16 %


May 1st

Sweco share distribution

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From To Shareholders A-shares B-shares C-shares Total Number ofShares Votes % Holding %

1 - 500 4,829 54,304 830,771 0 885,075 0.78 % 0.96 %

501 - 1000 1,270 36,150 1,002,899 0 1,039,049 0.77 % 1.12 %

1001 - 5000 1,514 120,403 3,317,565 0 3,437,968 2.56 % 3.72 %

5001 - 10000 247 105,505 1,740,183 0 1,845,688 1.58 % 2.00 %

10001 - 15000 85 75,141 984,201 0 1,059,342 0.98 % 1.15 %

15001 - 20000 46 19,900 803,847 0 823,747 0.57 % 0.89 %

20001 - 187 8,956,761 73,469,217 900,000 83,325,978 92.76 % 90.16 %

Total 8,178 9,368,164 82,148,683 900,000 92,416,847 100.00 % 100.00 %


May 1st

Dividend

Distribute at least half of profitafter tax to the shareholders…

…while maintaining a capitalstructure that permits develop -ment of and investments in thecompany’s core business”

Financial strength

Net debt shall be lessthan 2 x EBITDA…

..to achieve a cost effectivecapital structure and enablefurther value creatingacquisitions”

Sweco financial policies

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0.24 0.24 0.35 0.40 0.50 0.600.80

1.10

1.50

2.00 2.00 2.00

3.00 3.003.25 3.25

3.50

20011999 2002 2004 200920082003 20062000 201420121998 20102005 20132007 2011

CAGR: 18%

Sweco - Consistent track record ofincreasing dividendsDividend, SEK / share


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Sweco - Leading to strong shareholderreturns

Total return to shareholdersIndex 100 = 21 September 1998

*) SIXRX total return indexSource: SIX Financial information, Sweco analysis 37

5,500

5,000

4,000

4,500

2,000

3,500

500

3,000

2,500

1,500

1,000

0

Sweco B+4,930%(CAGR 26%)

SIX RX+554%*(CAGR 11%)

2000 2005 2010 2015


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