Bilfinger launches sale of construction unit: sources
FRANKFURT (Reuters) - German engineering and services group Bilfinger has started the sale of its construction business as it moves away from a business model vulnerable to price wars in the building sector, sources familiar with the transaction said.
Investment bank Rothschild, which is organizing a possible deal of around 200 million euros ($272.3 million), has sent the first information packages to potential buyers, the sources said. Initial bids will probably be due in July, the sources said.
Bilfinger is looking for possible buyers among construction and engineering companies such as Strabag, Porr, Skanska, Vinci and Bouygues, the sources added.
Bilfinger, Rothschild and the potential bidders declined to comment.
Bilfinger wants to focus on providing higher-margin engineering and services for industrial facilities, power plants and real estate. It said earlier this month it planned to sell a significant part of its construction business within a year.
The division - heavily exposed to Germany and other European countries - builds steel bridges, tunnels, subways and urban rail lines as well as noise protection walls. In the field of energy, it makes foundations for offshore wind parks and overhead power lines.
While selling activities with 800 million euros in sales, Bilfinger is keeping smaller construction businesses such as those involved in the offshore wind and power grid sectors.
Strabag Chief Executive Thomas Birtel said recently that Strabag would look at the asset, adding that a potential bid would probably not be very competitive due to the large overlap of the businesses between the two firms.Vinci Chief Executive Xavier Huillard has said the group is targeting acquisitions mainly in construction of airports, but also in specialized civil engineering and for the oil and gas industry.
Bilfinger's construction unit posted EBITA (earnings before interest, tax, depreciation and amortization) of 1 million euros in 2013, compared with 25 million euros the year before, hit by its loss-making German road construction unit and Polish construction business.
The company sold the German unit in the fourth quarter last year and has said it is overhauling the Polish business.
While Germany's residential construction market has picked up in the past year, construction of public-sector commercial properties has been broadly flat.
Analyst Gianmarco Bonacina of Equity SIM Research said he expected Bilfinger to sell the unit at a value equivalent to 30 percent of its sales.
"I currently assume that Bilfinger could sell the business for an enterprise value of 240 million euros," he said.
Bankhaus Lampe analyst Marc Gabriel said he estimated the enterprise value of the construction division - including the parts that Bilfinger is keeping - at 255 million euros, based on 2015 estimated earnings before interest and tax (EBIT) of 41 million euros.
A third analyst, who declined to be identified, said he estimated the sale to reap net proceeds of around 100 million euros.
(Additional reporting by Marilyn Gerlach in Frankfurt, Gilles Guillaume in Paris, Sven Nordenstam in Stockholm, Angelika Gruber and Georgina Prodhan in Vienna; editing by Jane Baird)
- Alabama man gets $1,000 in police settlement, his lawyers get $459,000
- Doctor with Ebola in New York stable; nurse is virus-free
- New York police officer critically wounded in hatchet attack |
- Putin accuses United States of damaging world order
- Exclusive: Charred tanks in Ukraine point to Russian involvement