Boskalis and HBG agree to merge

The new company will be an important player in a number of selected European and international construction markets and will have a leading international position in the dredging market. The company is active in the dry and wet infrastructure sectors, housing and building, consultancy and engineering as well as industrial contracting. On a pro forma basis, the new company in 1999 had a turnover of EUR 5.8 billion [NLG 12.8 billion]. The company will have approximately 23,000 employees in more than 50 countries across five continents. It will be one of the best positioned European construction and dredging companies. Based on the respective closing prices as at 12 May 2000, the market capitalisation of the combined company will be approximately EUR 1.2 billion [NLG 2.5 billion].

Transaction

Boskalis and HBG intend to establish a new company, into which both companies will be merged by way of a statutory merger. This new company will have the usual Supervisory Board and Board of Management structure. The new company will be 50% owned by Boskalis shareholders and 50% owned by HBG shareholders. As a result of the merger, the listings of the Boskalis share certificates and the HBG 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.

The competition authorities of the European Union and the United States will be notified of the transaction. 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.'

J. Veraart, President of the Board of Management of HBG, emphasised 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.'

Strategic advantages of the merger

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 organisation, and composition and deployment of the fleet. In addition, considerable savings will be realised 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] per year by 2002. The savings on capital expenditure are estimated to be approximately EUR 135 million [NLG 300 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 realise 20% annual growth of earnings per share in the coming years.

Management

The company will have a Board of Management which will initially consist of  R. van Gelder, J.J.M. Veraart, P.A.M. Berdowski, C.J.A. Reigersman and K.K. Troost. Messrs. Veraart and Van Gelder will jointly preside over the Board of Management. D. Sinninghe Damsté, since 1988 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 ten 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 [currently a member of the Board of Management of HBG] as Board Chairman and K.G. van Nes, L. Vellekoop [both currently members of the Board of Management of Boskalis], R.T. Berends and J. van Herwijnen as Board members.

Company descriptions

HBG is a European construction group which carries out projects on a worldwide scale, and which specialises 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] and a net profit of EUR 63 million [NLG 138 million].

Boskalis is a leading international dredging contractor, which core activities are the construction and maintenance of ports and waterways, land reclamation, coastal defence and riverbank protection. With nine significant home market positions within and outside Europe, the company covers virtually all market segments in dredging. Boskalis operates in approximately 50 countries across five continents, and employs over 3,000 people. The company’s head office is in Papendrecht. In 1999, Boskalis achieved a turnover of EUR 851 [NLG 1,875 million] and a net profit of EUR 58 million [NLG 127 million].

Media enquiries:

Koninklijke Boskalis Westminster nv:

R.T. Berends, telephone +31 78 6969822

Hollandsche Beton Groep nv:

A. Pronk, telephone +31 70 372 2121