Sweco acquires Grontmij

Creating the leading

European engineering
consultancy

Sweco will make a recommended public offer to buy all

shares in Grontmij. In other words: Sweco and Grontmij
will combine to form the leading engineering
consultancy on the European market. We are taking a
major step towards becoming Europes most respected
company in the industry. Not just in sales but more
importantly as the first choice for customers, employees
and other stakeholders.

WHY COMBINE?
Because Sweco and Grontmij are an
excellent fit geographically,
operationally and culturally.
Together, Sweco and Grontmij will
have a consolidated leadership
position in the Northern European
markets. We will have an unrivalled
base of competence, and be able to
take on the industrys most complex
and challenging projects.

Creating the leading European engineering consultancy

Todays topics

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

Creating the leading European engineering consultancy

Creating the leading European

engineering consultancy

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 s

most respected company in our industry

Creating the leading European engineering consultancy

A new market leader

European turnover (FY 2014, EUR bn)

Sweco

1.7

Atkins

1.2

Aecom + URS2

1.1

Fugro

1.1

Sweco

1.0

Rambll

0.9

Arcadis

0.9

Mott MacDonald

0.9

0.9

COWI
Grontmij1
Note 1) Excluding France

0.7
0.7
2) Aecom 2014Q3 LTM, URS FY2013
6

Creating the leading European engineering consultancy

Geographical footprint
#1 on the European market leading
positions in 6 individual countries

#
1

A consolidated footprint that enables

Proximity governance

#3
#
1
#3

Cultural similarities and potential for

cross border cooperation
Potential to leverage strong cash flow
from the Nordics to pursue strategic
opportunities in Northern Europe

#
3
#2

Creating the leading European engineering consultancy

Todays topics

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

Creating the leading European engineering consultancy

Sweco in brief
#1 in the Nordics
#4 on the European market
8,500 employees
Total sales of EUR 1.0 billion

Creating the leading European engineering consultancy

Sweco plans and designs the

communities and cities of the future

Planning and designing

light-rail in Bergen

Design the worlds most

modern bio product mill for
Mets Fibre

Detailed design of the City of

Pragues water supply system

Architectural design and

engineering at the ESS
research facility

Design new metro line in

Stockholm

10

Creating the leading European engineering consultancy

Long term and profitable growth

~ 100 firms successfully acquired and integrated in past decade
Net sales
Operating profit
SEK M

SEK M

CAGR 14%

CAGR 21 %

11

Creating the leading European engineering consultancy

Todays topics

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

12

Creating the leading European engineering consultancy

Grontmij in brief
Strong European presence
Approximately 6,0001 employees

Total sales of EUR 0.71 billion

1) Excluding operations in France

13

Creating the leading European engineering consultancy

Grontmij makes a lasting contribution to

a changing world
Converting Skearbaeck power
station into a fully sustainable
power station
Making the energy network
ready for a sustainable
future

Preparation comprehensive
flood risk management plan for
Poland
Improve national road network

Improve Ring road Antwerp

Installation of worlds largest

waste-water heat pump
14

Creating the leading European engineering consultancy

Long and proud history, recent challenges

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

15

Creating the leading European engineering consultancy

Over the past year, Grontmij reviewed its

strategic options
Start strategic review:
all options open

Discussions
with selected
parties

2014
Q1

Sweco offer
acceptable to
proceed

Major
Shareholders
support

2015
Q2

Q3

Acquisition by a
strong partner
selected

Q4

Q1

Intensified
discussions

Q2

Today

Reciprocal Due
diligence

16

Creating the leading European engineering consultancy

Todays topics

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

17

Creating the leading European engineering consultancy

Company high-lights
Accelerate strategies
Acquisition-driven growth
Operational improvements
Unrivalled competence base

18

Creating the leading European engineering consultancy

Strengthening the value proposition to

customers
Unrivalled competence base
Ability to take on the most complex and
challenging projects
Complementary competences

19

Creating the leading European engineering consultancy

Developing and attracting key talent

Strengthened ability to attract key talent
Even more opportunities for
development and growth
Part of a high performing organization

20

Creating the leading European engineering consultancy

Todays topics

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

21

Creating the leading European engineering consultancy

Key terms of the offer

Sweco will make a recommended public offer for all outstanding shares in Grontmij
Recommended by Grontmijs 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

22

Creating the leading European engineering consultancy

Projected mid-term financial effects

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 four
years 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

23

Creating the leading European engineering consultancy

Financing
61% of offer in equity (EUR 214 million) Financed through issuance of new
shares
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 Swecos two largest shareholders

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

24

Creating the leading European engineering consultancy

Integration plan and principles

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 Swecos Executive Team is
expanded with three new members from Grontmij
Current Grontmij country management will remain in position key staff
managers will be offered positions in new organization
Grontmijs executive board will step down and support the integration
process
Combining best practices and competencies - best person for the job
principle used in cases of overlap
Work with joint integration plans to be commenced immediately

25

Creating the leading European engineering consultancy

Indicative timetable
Launch of the Offer / publication of offer memorandum

July 2015

EGM Sweco

August 2015

EGM Grontmij

August 2015

Closing of the acceptance period

Rights issue

September 2015

2015

26

Creating the leading European engineering consultancy

Near-perfect fit

Value creation through synergies and operational

improvements

Strengthened value proposition to customers

Enhanced opportunities for employees

27

Appendix

28

Creating the leading European engineering consultancy

Summary

Highly complementary geographic footprints in an attractive region

Benefits of similar governance models and culture
Solid platform for growth in Northern Europe

Value creation
through profit
improvements

EUR 27 million in annual synergies and operational improvements

EPS accretive in the second year after closing
EUR 50 million integration cost impacting EBITA

Strengthened
value proposition
to customers

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

Near-perfect fit

Enhanced
opportunities for
employees

29

Creating the leading European engineering consultancy

Key offer conditions

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 in
favor 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

30

Creating the leading European engineering consultancy

Key financials
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

FY 2014 (EURm)

Exchange rate SEK/EUR 9.0968 (average 2014)

Note: Grontmij financials excluding France
1) Grontmij accounts adjusted to follow the Sweco P&L definitions
Source: Annual accounts of Sweco and Grontmij, Sweco analysis

31

Creating the leading European engineering consultancy

Key financials
Grontmij1

Sweco

Combined

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

FY 2014 (SEKm)
Total sales

Exchange rate SEK/EUR 9.0968 (average 2014)

Note: Grontmij financials excluding France
1) Grontmij accounts adjusted to follow the Sweco P&L definitions
Source: Annual accounts of Sweco and Grontmij, Sweco analysis

32

Creating the leading European engineering consultancy

Sweco largest shareholders

Shareholder

A-shares

B-shares

Total Number of
Shares

Votes %

Holding %

Familjen Nordstrm

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 %

10,000

3,989,555

3,999,555

2.31 %

4.33 %

Lannebo fonder

4,001,569

4,001,569

2.26 %

4.33 %

JPM CHASE NA

3,856,030

3,856,030

2.18 %

4.17 %

Swedbank Robur fonder

3,224,209

3,224,209

1.82 %

3.49 %

250,000

200,000

450,000

1.53 %

0.49 %

Odin Sverige AksjefondetT

2,080,879

2,080,879

1.18 %

2.25 %

KAS Bank Client ACC

1,998,744

1,998,744

1.13 %

2.16 %

Nordea Investment Funds

hman, Anders

May 1st

33

Creating the leading European engineering consultancy

Sweco share distribution

From To

Shareholders

A-shares

B-shares

C-shares

Total Number of
Shares

1 - 500

4,829

54,304

830,771

885,075

0.78 %

0.96 %

501 - 1000

1,270

36,150

1,002,899

1,039,049

0.77 %

1.12 %

1001 - 5000

1,514

120,403

3,317,565

3,437,968

2.56 %

3.72 %

5001 - 10000

247

105,505

1,740,183

1,845,688

1.58 %

2.00 %

10001 - 15000

85

75,141

984,201

1,059,342

0.98 %

1.15 %

15001 - 20000

46

19,900

803,847

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 %

Votes % Holding %

May 1st

34

Sweco financial policies

Dividend

Financial strength

Distribute at least half of profit

after tax to the shareholders

Net debt shall be less

than 2 x EBITDA

while maintaining a capital

structure that permits develop ment of and investments in the
companys core business

..to achieve a cost effective

capital structure and enable
further value creating
acquisitions

35

Creating the leading European engineering consultancy

Sweco - Consistent track record of

increasing dividends
Dividend, SEK / share

CAGR: 18%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

36

Creating the leading European engineering consultancy

Sweco - Leading to strong shareholder

returns
Total return to shareholders
Index 100 = 21 September 1998

5,500
Sweco B
+4,930%
(CAGR 26%)

5,000
4,500
4,000
3,500
3,000
2,500

2,000
1,500
1,000

SIX RX
+554%*
(CAGR 11%)

500
0
2000

2005

2010

2015

*) SIXRX total return index

Source: SIX Financial information, Sweco analysis

37