Sweco acquires Grontmij Creating the leading European engineering consultancy 1
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 Europe s 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 industry s most complex and challenging projects.
Today s topics Introduction Sweco in brief Grontmij in brief The combined company The transaction 3
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 5
A new market leader European turnover (FY 2014, EUR bn) Sweco Atkins Aecom + URS 2 Fugro Sweco Ramböll Arcadis Mott MacDonald ÅF COWI Grontmij 1 Note 1) Excluding France 1.2 1.1 1.1 1.0 0.9 0.9 0.9 0.9 0.7 0.7 2) Aecom 2014Q3 LTM, URS FY2013 1.7 6
Geographical footprint #1 on the European market leading positions in 6 individual countries A consolidated footprint that enables Proximity governance #3 # 1 # 1 Cultural similarities and potential for cross border cooperation # 3 #3 Potential to leverage strong cash flow from the Nordics to pursue strategic opportunities in Northern Europe #2 7
Today s topics Introduction Sweco in brief Grontmij in brief The combined company The transaction 8
Sweco in brief #1 in the Nordics #4 on the European market 8,500 employees Total sales of EUR 1.0 billion 9
Sweco plans and designs the communities and cities of the future Planning and designing light-rail in Bergen Design the world s most modern bio product mill for Metsä Fibre Detailed design of the City of Prague s water supply system Architectural design and engineering at the ESS research facility Design new metro line in Stockholm 10
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
Today s topics Introduction Sweco in brief Grontmij in brief The combined company The transaction 12
Grontmij in brief Strong European presence Approximately 6,000 1 employees Total sales of EUR 0.7 1 billion 1) Excluding operations in France 13
Grontmij makes a lasting contribution to a changing world Making the energy network ready for a sustainable future Converting Skearbaeck power station into a fully sustainable power station Improve national road network Preparation comprehensive flood risk management plan for Poland Improve Ring road Antwerp Installation of world s largest waste-water heat pump 14
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
Over the past year, Grontmij reviewed its strategic options Start strategic review: all options open Discussions with selected parties Sweco offer acceptable to proceed Major Shareholders support 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Today Acquisition by a strong partner selected Intensified discussions Reciprocal Due diligence 16
Today s topics Introduction Sweco in brief Grontmij in brief The combined company The transaction 17
Company high-lights Accelerate strategies Acquisition-driven growth Operational improvements Unrivalled competence base 18
Strengthening the value proposition to customers Unrivalled competence base Ability to take on the most complex and challenging projects Complementary competences 19
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
Today s topics Introduction Sweco in brief Grontmij in brief The combined company The transaction 21
Key terms of the offer 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 22
Projected mid-term financial effects EUR 27 1 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
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 Sweco s two largest shareholders representing 45% of the economic rights in Sweco Fully committed debt financing for the combined entity 24
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 Sweco s 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 Grontmij s 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
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 September 2015 Rights issue 2015 26
Near-perfect fit Value creation through synergies and operational improvements Strengthened value proposition to customers Enhanced opportunities for employees 27
Appendix 28
Summary Near-perfect fit 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 Enhanced opportunities for employees Strengthened ability to attract key talent Expanded resources and international reach enhance opportunities for employee development and growth Part of a high performing organization 29
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
Key financials FY 2014 (EURm) Grontmij 1 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 France 1) Grontmij accounts adjusted to follow the Sweco P&L definitions Source: Annual accounts of Sweco and Grontmij, Sweco analysis 31
Key financials FY 2014 (SEKm) Grontmij 1 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 France 1) Grontmij accounts adjusted to follow the Sweco P&L definitions Source: Annual accounts of Sweco and Grontmij, Sweco analysis 32
Sweco largest shareholders Shareholder A-shares B-shares Total Number of Shares 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 33
Sweco share distribution From To Shareholders A-shares B-shares C-shares Total Number of Shares 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 1 st 34
Sweco financial policies Dividend Distribute at least half of profit after tax to the shareholders while maintaining a capital structure that permits develop - ment of and investments in the company s core business Financial strength Net debt shall be less than 2 x EBITDA..to achieve a cost effective capital structure and enable further value creating acquisitions 35
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
Sweco - Leading to strong shareholder returns Total return to shareholders Index 100 = 21 September 1998 5,500 5,000 4,500 Sweco B +4,930% (CAGR 26%) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2000 2005 2010 2015 SIX RX +554%* (CAGR 11%) *) SIXRX total return index Source: SIX Financial information, Sweco analysis 37