Heijmans N.V.

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Heijmans N.V.

Graafsebaan 13
's-Hertogenbosch NL-5248 JR
The Netherlands
Telephone: ( +31) 73 528 91 11
Fax: ( +31) 73 528 93 00
Web site: http://www.heijmans.nl

Public Company
Founded: 1923
Employees: 10,018
Sales: EUR 2.6 billion ($3 billion) (2003)
Stock Exchanges: Euronext Amsterdam
NAIC: 237310 Highway, Street, and Bridge Construction; 237110 Water and Sewer Line and Related Structures Construction; 237990 Other Heavy and Civil Engineering Construction; 531210 Offices of Real Estate Agents and Brokers

Heijmans N.V. has built a road to the number three position in the Netherland's construction industry, trailing only Koninklijke Volker Wessels Stevin and BAM. Headquartered in 's-Hertogenbosch, in the Netherlands, Heijmans owes its growth to a steady stream of acquisitions throughout the 1990s and into the 2000s, including Koninklijke IBC, completed in 2001, and the United Kingdom's Leadbitter, in 2003. Heijmans operates through four primary divisions. Homes & Offices encompasses the group's property development and home and office construction business, chiefly through subsidiaries Heijmans IBC Vastgoedontwikkeling and Heijmans IBC Bouw. Traffic & Transport, the company's historical activity, is chiefly operated under the Heijmans Infrastructure division, and specializes in the design, development, construction, and maintenance of roads and other transport infrastructure projects. Industry & Production includes Heijmans construction services for the industrial sector, and also manufacturers and distributes building materials, including prefab hulls, concrete, brickwork, roofing, and insulating plates. The company's fourth division is Heijmans International, which is leading the group's development beyond the Netherlands into Belgium, Germany, and the United Kingdom. The Netherlands nonetheless remains by far the group's strongest market, at 84 percent of its EUR 2.6 billion sales in 2003. Heijmans, along with others in the Dutch construction industry, has run afoul of the Netherlands' competition authorities, facing charges of price fixing, market sharing agreements, and other anti-competitive practices. In response, the company has developed a new charter for good conduct. Heijmans is listed on the Euronext Amsterdam Stock Exchange. Guus Hoefsloot was named chairman of the company in 2004.

Street Builder in the 1920s

Rosmalen native Jan Heijmans was just 20 years old when he went into business for himself as a street builder. Heijmans' first project was a contract for paving the road in front of the Den Bosch train station. Hampered by the difficult economic climate of the late 1920s and 1930s, and by the Nazi occupation of the country during World War II, Heijmans remained a small company. Yet Heijmans was also well-positioned to take advantage of the vast reconstruction needed in the Netherlands following the war. During this period, the company also extended its business beyond street-building into the general construction sector.

During the 1950s, Heijmans began participating in a number of international infrastructure projects, notably in Turkey and the Middle East. The company also grew through acquisition, buying up restoration and renovation specialist Koninklijke Van Drunen. Joining the company during this time were Heijmans sons Theo, Lambert, and Gerardlater joined by youngest brother Jan in 1966. Each was expected to start at the bottom levels of the company and work their way up to a position on the company's board of directors. Founder Jan Heijmans died at the age of 63. By then, he had decided to concentrate the company's activities in the Netherlands, where it began competing for national contracts. The company also extended its operations to cover a wider range of construction markets during this time. As part of that effort, in 1975 Heijmans acquired HBS Den Bosch, a move which brought the company into the distribution of building materials. HBS Den Bosch later grew into one of that sector's largest companies in the Netherlands.

Heijmans remained a modest-sized business, among many others in the highly fragmented Dutch construction industry through the 1980s. Toward the end of that decade, however, the sector began making its first movement to consolidation, particularly in view of the coming single European market slated for 1992. Heijmans began positioning itself as a central player in the emerging market in the late 1980s with the naming of Joop Janssen as company chairman.

Under Janssen, Heijmans set itself a goal of topping NLG 1 billion in sales before the mid-1990s, a level that would place the company among the Netherlands' top construction groups. Janssen first set to work improving the company's margins, shifting the group's property development operations toward the middle and higher-end ranges. By the mid-1990s, the company had successfully improved its margins in its home building activities from less than 1 percent to as high as 6 percent. Janssen also led the company on an early wave of acquisitions.

Becoming a Dutch Leader in the 2000s

By the early 1990s, Heijmans had already outgrown its corporate structure as a family-owned company. In order to achieve further growth, the company required capital. Faced with the option of allowing itself to be bought up by a larger company, Heijmans instead chose to go public. In 1993, the company listed on the Euronext Amsterdam Stock Exchange.

The listing provided Heijmans with the capital to begin a steady series of acquisitions that lifted the company to the number three spot in the Netherlands by the turn of the 21st century. By 1994, the company had already achieved its objective, topping NLG 1 billion in sales that year. The company launched its buying spree in earnest in 1995, acquiring Noorlander Beheer and NV Algemene Ondernemingen VAG, adding more than EUR 90 million to its total annual sales. The company continued in 1996, adding such companies as Exters Beheer, Van Helvoirt Beheermij, Holding De Enk, and Vos en Teeuwissen. That year also marked a new extension outside of the Netherlands with the purchase of Belgium's BAB, or Belgische Asfalt-en-Betonmaatschappij.

These acquisitions on the whole shared similar traits in that nearly all were small, locally operating companies. Heijmans, which had adopted a decentralized, divisional structure in the 1970s, generally maintained that policy for its new acquisitions, leaving existing management in place. In this way, the company was able to complete its national network while remaining close to its local markets.

Larger acquisitions leading up to 2000 included Vebo Holding and Walcherse Bouw Unie in 1997; Verenigde Bedrijven Van Lee, a company with sales of EUR 63 million; Van Zwol Groep, with sales of EUR 45 million, in 1999; Van den Berg, a EUR 59 million company; and Verengide Hijbeek Bedrijven, with sales of EUR 33 million, in 2000. Also in 2000, the company continued its Belgian expansion, picking up that country's Van den Berg BV, which added its expertise in fiber optic cable construction and some EUR 45 million in sales.

By the end of 2000, Heijmans' annual sales had already topped EUR 1.5 billion, representing a 25 percent increase in just one year. Yet, while acquisitions provided some 10 percent of the rise in the group's revenues in 2000, organic growth remained the primary growth generator.

That situation changed dramatically in 2001, when the company announced its acquisition of family-controlled Koninklijke IBC. Like Heijmans, IBC was a major player in the Dutch housing market, with sales of some EUR 750 million per year. IBC also complemented Heijmans' Belgium expansion with its own operations in that country. The combined group now represented more than EUR 2.3 billion in revenues per year, placing it as number three in the Dutch construction market behind Koninklijke Volker Wessels Stevin and BAM. Following the merger with IBC, Jan Heijmans, the last of the founding family still serving on the company's board of directors, announced his decision to retire.

Heijmans made a new attempt to gain scale in the Netherlands, making a bid for the construction operations of rival Hollandsche Beton Groep (HBG), which was then in the process of negotiating a sale of its dredging business. The deal would have created one of the top five European construction groups. However, HBG ultimately rebuffed Heijmans' offer.

International Targets for the New Century

With little room for dramatic growth in the Netherlands, Heijmans began developing plans for further international expansion. Germany became the group's new objective in a so-called "oil slick" expansion strategy that limited the company's acquisition targets to nearby markets. Heijmans was also careful to choose only profitable companies for its expansion, preferring to leave purchases of struggling businesses to turnaround specialists. Consequently, in November 2001, the company first looked to pick up Martin Wurzel Baugesellschaft, based in Jullich, in Germany's North Rhine Westphalia region, but called off that acquisition early in 2002.

Company Perspectives:

As a company Heijmans wishes to make a significant contribution to construction in the countries in which it operates. Aspiring to operate as a full-service construction and property development company, Heijmans focuses on all of the activities in the value chain, from consultancy services and design to maintenance and management. The wealth of knowledge and experience that exists within the organization combined with the entrepreneurial skills that Heijmans is renowned for make Heijmans the obvious choice: innovative in its approach to the market and in its development of products and concepts, transparent to the parties that have an interest in the company, highly versatile in its range of products and services and concerned about its social environment. Heijmans is aware of its social responsibility and carries out its activities safely, with due concern for the environment and in accordance with the relevant legislation and regulations.

Instead, the company began discussion with the creditor banks of another German group, Phillip Holzmann, which had gone into bankruptcy proceedings. By May 2002, the company had reached an agreement to acquire the first of three companies from the Holzmann groupDubbers-Malden, based in the Netherlands' Gelderland region along the German borderafterward purchasing Franki Grundbau in Hannover and Holzmann's Grafenwohr operation, near Nuremberg. These acquisitions placed Heijmans in a position to compete for high-rise construction contracts and engineered construction and public works projects in Germany's southern and western regions.

From Germany, Heijmans' eye turned to the United Kingdom. The company made a first entry into that market via a joint venture with CA Blackwell, forming Heijmans Blackwell Remediation Ltd., which focused on soil-cleaning operations in the United Kingdom and Ireland.

By then, Heijmans, along with other groups in the Netherlands' construction industry, faced scrutiny from the country's monopolies and competition authority, the Nma, which accused the company of, among other things, having paid off a French company in order to secure a construction bid. The company was also accused of price fixing and a number of other fraudulent practices and was ultimately fined some EUR 14 million. In response, Heijmans became one of the first in the industry to adopt a new standard code of practice.

In the meantime, Heijmans continued seeking out new acquisitions, the most significant of which was the Proper-Stok Groep, which added its revenues of EUR 150 million to the group in 2002.

At the beginning of 2003, Heijmans completed its entry into the U.K. market when it announced that it had agreed to acquire Leadbitter Ltd. That company, with operations largely in public sector projectsincluding schools, hospitals, leisure facilities and housinghad seen its revenues increase from just £300,000 pounds in 1993 to more than £110 million in 2002 under owner Bob Rendell. The addition of Leadbitter gave Heijmans a firm foothold for future expansion into the United Kingdom.

Joop Janssen retired from the company in September 2003, having built Heijmans from a small regional construction company to one of the Netherlands' top three leaders. Janssen had personally brought in his replacement, former HBG executive Guus Hoefsloot, whom he had met during the takeover discussions for that company. Under Hoefsloot, the company turned its attention toward achieving its next strategic objectivesstepping up the share of its international operations to at least 20 percent of revenues by 2008.

Principal Divisions

Heijmans International; Heijmans Nederland; Heijmans IBC; Heijmans Industry and Production; Heijmans Belgium; Heijmans U.K.; Heijmans Germany.

Principal Competitors

RWE AG; Consolidated Contractors Company; Nippon Oil Corporation; Bouygues S.A.; JFE Holdings Inc.; VINCI S.A.; China Civil Engineering Construction Corporation; United Engineers Malaysia Bhd.; Skanska AB; Hochtief AG; Royal BAM Group N.V.; Colas S.A.; Construtora OAS Ltda.; ENCOL S.A.

Key Dates:

Jan Heijmans starts up a road building business in Rosmalen, the Netherlands.
After completing several projects in Turkey and the Middle East, Heijmans decides to focus on its domestic market.
Heijmans diversifies, with operations in all construction sectors, and acquires HBS Den Bosch.
Joop Janssen is named company chairman and begins transforming Heijmans from regional company to one of the Netherlands largest construction companies.
Heijmans goes public on the Amsterdam Stock Exchange.
The company begins a new surge of international expansion, acquiring Belgische Asfalt-en-Betonmaatschappij (BAB) in Belgium.
The company caps its acquisition drive with the purchase of Koninklijke IBC, making Heijmans the third-largest construction company in the Netherlands.

Further Reading

Bechtold, Kees, "Bouwconcern Hiejmans is na nieuwe fraude terug bij af," Brabants Dagblad, February 16, 2004.

, "De laatste Heijmans neemt afscheid," Brabants Dagblad, May 4, 2001.

Board, Laura, "Heijmans Prepares to Bid for Rival," Daily Deal, June 27, 2001.

"Enhanced Focus in a Difficult Market," Europe Intelligence Wire, September 4, 2003.

"German Coup for Heijmans the Builder," Algemeen Dagblad, May 30, 2002.

"Heijman Walks away from Holzmann Deal," Daily Deal, June 26, 2002.

Leitch, John, "Heijmans Makes Move into UK with Leadbitter Purchase," Contract Journal, February 12, 003, p. 2.

Major, Tony, and Ian Bickerton, "Heijmans Chases Holzmann Units," Financial Times, April 23, 2002, p. 29.

Mees, Henk, "Groei Heijmans kent geen grenzen," Brabants Dagblad, March 15, 2002.

, "The Netherlands Has Got Heijmans Measles," Brabants Dagblad, May 10, 2002.

M. L. Cohen