The offerwhich is supported by Amey´s Board of Directorsis conditional upon obtaining at least 90% of share capital
The offer is 32 pence per share (0.47 euros per share), representing a 19% premium over the share´s yesterday closing price
The total value of the offer for 100% of the company is 81 million pounds sterling (118 mn euros), which will be paid out of cash resources
The operation, which has a major strategic component, strengthens Ferrovial´s services area and international strategy, which is focused on OECD countries
Amey´s activities involve comprehensive management of infrastructure (roads and railways and underground rail), facility management (maintenance and integrated management of buildings and facilities) and management of BPO (Business Process Outsourcing)
Amey is one of the leading players in the area of private financing and management of infrastructure and services for government under PFI (Private Finance Initiative) and PPP (Public Private Partnership) formulas
Madrid, 16 April 2003. Ferrovial today announced an offer for 100% of the shares of Amey Plc, one of the UK´s leading services companies.
Ferrovial, which aims to gain control, is offering 32 pence per share (0.47 euros per share), i.e. a premium of 19% over the share´s yesterday closing price on the London Stock Exchange and of 37% over the average in the last three months. Consequently, the total value of the offer for 100% of Amey is 81 million pounds sterling (117,7 mn euros).
The operation, which is supported and recommended unanimously by the Board of Directors of Amey, is conditional upon obtaining offer acceptance of at least 90% of the share capital.
Ferrovial has already obtained commitments to accept the offer from shareholders representing 32.6% of share capital, including the shares held by the company´s directors.
A strategic operation to strengthen the services area and the company´s position in an OECD country
“The deal has a strong strategic component -explains Joaquín Ayuso, Chief Executive Officer of Ferrovial-: services is an area in which we have a presence and want to continue to grow, by increasing our exposure to stable activities under long-term contracts. With this acquisition, Ferrovial will obtain a strong position in the United Kingdom, a key european market with the most experience of outsourcing services. We will also obtain critical mass and know-how in the PFI (Private Finance Initiative) markets. Our objectives in terms of internationalisation are to enhance our exposure to OECD countries, in this case the United Kingdom, where we have had a presence since 2001 following the acquisition of Bristol Airport. Therefore, the UK could also act as a springboard for our development in other businesses and markets.
Amey, one of the leading services companies in the UK, focuses on comprehensive management of infrastructure (roads, railways and underground rail, principally), street lighting, facility management and Business Process Outsourcing (BPO).
Amey is also one of the largest and most experienced players in a market with considerable growth potential: the private-sector financing and development of infrastructure and services for government through such systems as PFI (Private Finance Initiatives) and PPP (Public Private Parnership).
Amey currently has an option to acquire 33% of Tube Lines, the company which holds the maintenance concession for London Underground (Jubilee, Northern and Piccadilly Lines).
Listed on the London Stock Exchange since 1995, Amey attained 1,350 million euros in revenues in 2002 and it had a backlog of 3,770 million euros at year-end. The company currently has a work force of 7,500. “The company´s scope for value creation is another of the plus points in this acquisition -adds Iñigo Meirás, General Manager of Services division of Ferrovial-. Despite its financial difficulties experienced by the company in 2002, Amey´s operations are healthy with a sound portfolio of strategic businesses, it has a solid commercial and operating base, and a good management team.
Leading UK infrastructure maintenance and facility management company
Amey is the leading player in the road maintenance business (an estimated 24% market share), with maintenance contracts from the Scottish Executive (1,148 km) and sections of motorway in the West Midlands (Birmingham) (889 km), Manchester and Liverpool (646 km).
In the railway maintenance market, in which Amey has an estimated 12% share, its main contracts include the London Underground, the West Midland and Chilterns region and the Exeter region.
As for facility management, it manages numerous buildings for customers in the private and public sectors (defence, local government, hospitals, schools, etc.).
Increased size plus complementarity with Ferrovial´s Services division
Ferrovial´s Services division covers urban services (street cleaning, municipal solid waste collection and comprehensive water management) and, like Amey, it is also involved in facility management and infrastructure maintenance.
Through subsidiary Grupisa, Ferrovial is also involved in road maintenance: it maintains over 5,600 km of highways in Spain.
As part of its growth strategy, in 2002 it moved into the Portuguese market by acquiring Novipav, one of Portugal´s leading companies in this business.
Grupisa´s main contracts include maintenance and operation of the M-40 road in Madrid and the A-7 motorway in Valencia, as well as a number of maintenance contracts for the La Plata (Caceres) and the Mediterranean highways.
In the area of facility management, Ferrovial manages over 4 million square metres in a total of 2,300 buildings, ranging from hospitals to museums, universities, prisons, shopping centres, factories, landmark buildings and offices.
Its main contracts include maintenance and cleaning for the buildings and offices of the Spanish Post Office, several defence buildings and prisons, comprehensive maintenance of the high-speed rail stations in Zaragoza, Calatayud and Guadalajara, and the maintenance and cleaning of 51 hospitals in Spain.
In 2002, the Services division increased revenues by 58.2% to 340.1 million euros and its backlog at year-end stood at 816 million euros.
Background information – Description of Ferrovial
Ferrovial was founded in 1952 as a construction company. Fifty years later, it is a diversified industrial group which is listed on the stock exchange, employs over 28,000 people and is active in areas that complement its core construction business, such as infrastructure, real estate development and services.
The largest construction group in Spain and the second-largest in Europe in terms of market capitalization
Steady, sound growth in revenues and profitability have made Ferrovial one of the leading construction groups: it is the largest in Spain and the second-largest in Europe in terms of market capitalization.
From focusing primarily on construction (which represented 58% of operating profit in 1998), Ferrovial is now an industrial group in which non-construction activities represent 68%.
The more stable business areasinfrastructure and servicesaccount for 47% of total operating profit.
The pace of investment under Spain´s Infrastructure Plan, the group´s management experience and efficiency and its sizeable cash flow are key reasons for maintaining construction at the core of Ferrovial´s strategy.
Its strength in Spain has been reinforced by a strong position outside Spain: in OECD countries, Latin America and Eastern Europe (through the acquisition of Budimex, Polands largest construction company).
A leader worldwide in private financing initiatives for transport infrastructure
Ferrovial is now one of the world´s largest groups in the private-sector development of transport infrastructure, with a committed investment of 1,700 million euros in 16 toll roads in Spain, Portugal, Ireland, Chile and Canada; 12 airports in Australia, the UK, Mexico and Chile (with more than 40 million of passengers); and 175,000 parking spaces in Spain. In the United Kingdom, it is joint owner (with the Macquarie Group) of Bristol airport.
This area is one of Ferrovial´s main growth drivers, backed by a constantly-growing market. Ferrovial´s objective is to create value through growth to attain critical mass and seize opportunities that arise in expanding markets, primarily in the OECD countries.
In real estate development, Ferrovial adopts an industrial approach focused on rapid asset turnover to minimise risks.
The type of productsfirst homes and brokerage of used homesand the search for novel marketing channels plus the development of real estate services are the key lines of Ferrovial´s strategy in this market.
In services, Ferrovial concentrates on urban services (street cleaning, solid waste collection and comprehensive water management), facility management and infrastructure maintenance; it is market leader in Spain in the latter two areas.
In addition to organic growth, the services business will expand through incursions into new markets, always in connection with the core activities, and by analysing investment possibilities that will afford fast growth.
Selective growth in OECD countries
Outside its home market, Ferrovial has made major progress by focusing on selective growth in OECD countries, hand in hand with its expanding infrastructure business as a means of entering new markets, plus the acquisition of sound leading companies in markets with growth potential.
Ferrovial is currently present in Canada, Poland, Australia, the United Kingdom, Portugal, Ireland and Latin America. In 2002, international activities provided 28% of group revenues and 42% of operating profit.
2002: a record year for earnings
Ferrovial set a record in 2002 in terms of earnings and share performance, and it continued to advance with its growth strategy, supported by favourable performance in the markets where it operates, a judicious investment policy and the constant search for innovation and excellence in management.
Net profit totalled 455.9 million euros in 2002, 108.8% more than in 2001. Excluding the extraordinary effect of the sale of 40% of Cintra (Ferrovial´s toll road subsidiary), this growth would have been 18%. Operating profit increased by 30% to 485.1 million euros.
Ferrovial´s consolidated revenues reached 5,040.2 million euros, 19% more than in 2001, and all business areas made significant progress: construction (+10.4%), infrastructure (+30.1%), real estate (+65.2%) and services (+58.2%).
At year-end, the backlog was close to 6,000 million euros in construction, 955 million euros in real estate and 816 million euros in services.
Ferrovial ended 2002 with a net cash position of 303 million euros and gross capital expenditure in the year amounted to 541 million euros (not counting 343 million euros in land purchases for real estate development).
In 2002, Ferrovial was included in the Morgan Stanley Capital International (MSCI) indexes and it was the first Spanish construction group to form part of the Dow Jones Sustainability Indexes, the worlds leading benchmark for companies committed to sustainability.
