Pitch Best Deal 2023: Royal Heijmans acquires Van Wanrooij
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Stem op deze deal via de stempagina: Mena.nl/genomineerden-best-deal-2023
Name of the deal: Royal Heijmans acquires Van Wanrooij
Date announced: 21-6-2023
Date closed: 5-9-2023
Published value: € 298 million
Buyer(s): Heijmans N.V.
Target(s): Van Wanrooij Bouw & Ontwikkeling BV
Seller: Van Wanrooij family
Involved firms and advisors
Involved firms and advisors buy side:
Financial advisors: AXECO, PwC, ING
Legal advisor: Allen & Overy
Financial DD advisor: PwC
Tax advisor: PwC, Allen & Overy
Involved firms and advisors target: -
Financial advisor: Deloitte
Legal advisor: JB Law
Financial DD advisor: Deloitte
Tax advisor: Deloitte
Involved firms and advisors sell side: -
Financial advisor: Deloitte
Legal advisor: JB Law
Financial DD advisor: Deloitte
Tax advisor: Deloitte
Pitch
Brief description deal / Deal outline
In June 2023, Heijmans announced it will acquire Van Wanrooij for an Enterprise Value of €298m. The acquisition is conservatively funded through a sub-10 wholly placed with selling shareholders, freely available cash and € 140m new (committed) bank debt.
About Heijmans
Royal Heijmans is a leading Dutch listed construction company focused on property development, residential building, Building & Technology and infra. Jan Heijmans started the company at the age of 20 in 1923 as a paving contractor. After one hundred years, Heijmans has built a strong reputation in the industry by making the sector better, smarter, and more sustainable. Every day, some 5,000 Heijmans employees work on the creation of a healthy living environment.
About Van Wanrooij
Van Wanrooij was started in 1969 by the two brothers Wim and André van Wanrooij and over more than 50 years has grown from a small contracting company into a successful family business in the residential building and development sector, with approximately 275 enthusiastic employees. Van Wanrooij is known as a close-knit and enterprising family business, focused on entrepreneurship, establishing lasting relationships, short lines of communication and investing in innovations.
Why should this deal win the Award for Best Deal Mid-Cap?
This transaction:
(i) Entrepreneurial acquisition by a public company, (ii) unique opportunity for Heijmans to contribute to the housing shortage in a difficult time, (iii) Continuity is granted for a family business, (iv) Unites two companies with strong culture and roots Brabant, (v) Was supported with a fairness opinion given its size and relative valuation
- Entrepreneurial acquisition by a public company
In this transaction Heijmans showed entrepreneurialism as listed Company. Due to that during a time in which the equity capital markets and housing market showed signs of recession. It took a long term (through the cycle) view on the housing market to invest in this unique opportunity, which grans them a solid basis on the medium term.
- Unique opportunity for Heijmans to contribute to the housing shortage in a difficult time
Despite the current headwinds in the Dutch housing market, Heijmans is confident about the future. After all, the underlying demand fornew-build homes remains as high as ever, with a growing population and strong demand for energy-efficient homes.
The acquisition of Van Wanrooij puts Heijmans in an excellent starting position to accelerate property development business with an expanded range of sustainable and affordable homes. This will increase Heijmans’ pro forma 2022 revenue by over 20% to € 2.2 billion and doubles its property development work in hand to 29,000 new-build homes from approximately 15,000. The acquisition increases Heijmans’ development capacity by 1,000 to 1,500 homes to 3,000 to 4,000 homes on an annual basis. Thereby ensuring a significant contribution to the current housing shortage.
- Continuity is granted for an old family business
Van Wanrooij was started in 1969 by the two brothers Wim and André van Wanrooij and over more than 50 years has grown from a small contracting company into a successful family business in the residential building and development sector, with approximately 275 enthusiastic employees. Van Wanrooij is known as a close-knit and enterprising family business, focused on entrepreneurship, establishing lasting relationships, short lines of communication and investing in innovations.
This transaction ensure continuity for the future. Over the past two years the family, had taken several steps on this front, together with the people in their organisation. The transition of the company to Heijmans is the next step in this process. All Van Wanrooij employees will become part of Heijmans while retaining their jobs.
- Unites two companies with strong cultural fit and complementary skill sets
The offices of Heijmans in Rosmalen and Van Wanrooij in Den Bosch are only 10km apart, and have strong cultural fit, and skilled and loyal workforce.
- Was supported with a fairness opinion given its size and valuation
The transaction value (c. €300m) was larger than the market capitalization of Heijmans at that time. In addition, the acquisition EBITDA multiple was c. 7.5x while the valuation of Heijmans implied by its share price is substantially lower.
To gain additional comfort, Heijmans’ Executive and Supervisory Boards received a written opinion, from merger and acquisition advisor Axeco Corporate Finance to the effect that the acquisition price is fair from Heijmans’ financial point of view.
Deal rationale:
The underlying demand for new-build homes remains as high as ever, with a growing population and strong demand for energy-efficient homes. The acquisition of Van Wanrooij puts Heijmans in an excellent starting position to accelerate its business in the housing market with an expanded range of sustainable and affordable homes.Selected strategic highlights of the proposed transaction:
- Strategic fit strengthens Heijmans’ position in property development and residential building
- Joining forces doubles work in hand to approximately 29,000 new-build homes (Heijmans stand-alone: about 15,000)
- Heijmans’ existing work in hand is particularly strongly represented in inner-city areas. In contrast, Van Wanrooij’s work in hand consists predominantly (95%) of houses in suburban areas. The combined portfolio provides a better balance between inner-city transformation assignments versus suburban house construction
- Van Wanrooij’s Optio® development concept and Heijmans’ Horizon® concept lend themselves perfectly to accelerated suburbanhousing construction. Van Wanrooij’s carpentry factory and Heijmans’ timber-frame housing factory will make it possible for Heijmans to scale up housing production quickly and efficiently
What is the impact of this deal for the company?
This transaction ensures continuity for the future. Over the past two years the family, had taken several steps on this front, together with the people in their organisation. The transition of the company to Heijmans is the next step in this process. All Van Wanrooij employees will become part of Heijmans while retaining their jobs.
For both companies the deal brings a lot of opportunities for further value creation, by accelerating the development of houses and scaling up industrial production of homes in Heijmans’ factory. There is a strong cultural match between the two parties. Heijmans and Van Wanrooij joining forces and sharing knowledge and best practices will lead to a player with the scale and abilities to efficiently develop new sustainable housing at competitive construction costs. The deal results in a player with the landbank, scale and financial firepower to change the market.
What is the impact of this deal for the direct stakeholders?
The weight and impact of the decision to sell the business is lifechanging decision for the Van Wanrooij family. Not just a commercial decision, but also a very personal one as well. The deal with Heijmans has a very profound impact and provides Van Wanrooij with a lot of comfort and composure. Heijmans is an excellent fit and shares the cultural values and entrepreneurial spirit. Part of the deal is that the directors of Van Wanrooij stay onboard to ensure a smooth integration into Heijmans, and the family Van Wanrooij has taken a significant shareholding in Heijmans. All Van Wanrooij employees will become part of Heijmans and retain their jobs.
This transaction with Van Wanrooij has been the largest acquisition for Heijmans in its 100-year history. The acquisition value exceeds the market capitalization of Heijmans, which shows the commitment and belief of Heijmans’ stakeholders in the housing market and this compelling investment case. All stakeholders of Heijmans, including the executive board, supervisory board, works council, financiers and key shareholders issued a positive recommendation for the deal. Despite the deal size, the deal has been financed in close cooperation with the existing house banks of Heijmans.
What is the impact of this deal on society?
The housing crisis grips the Netherlands and is almost a weekly headliner in the papers, the average price of a new home passed the EUR 500k hurdle last year. For a whole generation of youngsters, it is almost impossible to buy a new home. Moreover, the government is struggling to reach the target of 100.000 new build home annually (to put it mildly). Rocketing raw material prices, increased mortgage borrowing rates, nitrogen pollution and a backlog of granted permits are notable challenges in solving the crisis. Population growth, migration, an ageing population and smaller households have led to an urgent deficit of 315k houses. The Paris climate agreement has fueled the shift towards sustainable construction and energy-neutral homes.
Although we would be happy to win this award, it goes a little too far to say this deal solves all that. We do however have the strong belief that the deal has significant societal impact. Consolidation and cooperation are pivotal in realizing sufficient homes and keeping prices affordable. Heijmans and Van Wanrooij are deeply committed to invest in the housing market, and the acquisition contributes in obtaining the required scale to fully utilize a standardized (modular) construction approach. Sharing of best practices in construction processes leads to lower development and construction costs and efficient (accelerated) realization of new homes. Economies of scale, chain control and industrialization are key elements in addressing the current challenges in the housing market.
What is the impact of this deal on society?
The acquisition increases Heijmans’ development capacity by 1,000 to 1,500 homes to 3,000 to 4,000 homes on an annual basis. Thereby ensuring a significant contribution to the current housing shortage.
What was most complex about this deal?
The negotiations between parties took place in the context of rapidly shifting housing market – due to rising inflation and volatile energy prices.
The Van Wanrooij family was strongly focused at first obtaining transaction certainty and before any due diligence could take place in order to limit any public exposure. On the other hand, the transaction was very sizable and important for Heijmans requiring careful consideration of due diligence, valuation and marketing of the transaction.
At some point, the discussions were put on hold as it was difficult to provide sufficient comfort to the Van Wanrooij family to progress with access to information (“kip ei”).
To positively surprise the Van Wanrooij family Heijmans continued its preparations to obtain financing commitments from its banks to increase transaction certainty for the Van Wanrooij family. In parallel, Van Wanrooij prepared a VDD. This allowed to quickly proceed forward when common ground was found.
There was strong willingness on both sides to make complex matters simple, and to find sophistication in simplicity.
The deal was shaped in a highly confidential setting with only a handful of people involved from Van Wanrooij side, in the midst of a sharp (housing) market downturn. The deal made it past the finish line due to the perseverance on both sides to see the bigger picture, the ability to keep liking each other (also on a personal level), despite the challenges and complexities in the deal execution and structuring.
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