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Deloitte Transaction Highlights
Deloitte FAS Belgium provided acquisition DD services to Besix Group in view of their
acquisition of Parkeerbeheer. Parkeerbeheer is a Belgian parking lot operator both on and
off-street in Flanders.
Waeyaert-Vermeersch Isolatie was founded in 1967 and became in recent years one of the
leading Belgian players in the distribution of thermal, acoustic and fire proof insulation. In
Deloitte FAS Belgium provided acquisition DD 2009, the Group reported a turnover of EUR37m.
services to Waterland Private Equity in view of
their acquisition of Waeyaert-Vermeersch With its investment in Waeyaert-Vermeersch Isolatie, Waterland Private Equity Investments
Isolatie. will further support the growth strategy of the Group towards the future.
Deal value undisclosed
August 2010
DTT Member Firm(s) in: Belgium
Financial Adviser for: Business Modelling services for: Acquisition due diligence on behalf of:
Deloitte FAS Belgium provided integrated Deloitte FAS Belgium assisted Deceuninck Deloitte FAS assisted Unilin in its
M&A support to Baert & Zonen in its sale to NV with business modelling services within acquisition of Spectrim Distribution Ltd.
Bencis Capital Partners. the framework of refinancing and its (Ireland), a distributor of flooring products
capital increase.
As the world emerges from the downturn, recession and credit market conditions improve, stock 61 56
47 43 44 49 43
prices rebound and companies accumulate cash from cost-cutting measures. This together with 40 38
GDP growth is expected to lead to consolidation across industries to remove excess capacity. In
2010, we expect to see transactions designed to facilitate entry or expansion into growing Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10
geographic markets as companies seek opportunities to acquire solid brands and undervalued
Corporate transactions PE transactions
businesses that can be quickly scaled up.
Source: Mergermarket
European Construction M&A deal volume and median multiples increased in the LTM compared to
2009 but still largely remain below pre-crisis levels. During the LTM the following trends have been
observed :
• 267 transactions have been announced during the LTM, compared to 231 for the year 2009. Yearly transaction volume
Announced European transactions in Q3’10 (62 transactions) increased compared to the same (E.U. M&A: Construction)
period in 2009 (50 transactions).
• 81 private equity backed transactions (either as a buyer, either as a seller) have been announced 500
458
in the LTM against 55 in 2009, out of which respectively 71 and 48 transactions involved a private 404
164
equity buyer. 342 143
109
• Average enterprise value per disclosed deal in the LTM is €1250m against €699m in 2009. Note 118 231
267
that this average is calculated based on 102 disclosed deals for the LTM and on 84 disclosed 199 81
55
deals for 2009. 315 336 295 62
224 176 186
• Median transaction multiples increased from 6.7x EBITDA ratio in 2008 and 6.9x in 2009 to 8.6x 137
EBITDA ratio in LTM.
2005 2006 2007 2008 2009 YTD LTM
M&A activity in the Belgian (BE) Construction industry remains relatively stable over the LTM period
as compared to 2009, with respectively 4 and 5 deals announced involving a Belgian construction Corporate transactions PE transactions
company either as a buyer either as the target. Out of these 4 deals over the LTM 3 involved a PE Source: Mergermarket
buyer as compared to none in 2009. The recovery in terms of deal volume that is slightly showing on
the European Construction M&A market is currently not yet reflected on the Belgian market.
Sources: ECB October 2010 bulletin and “Bouwbarometer November 2010” of Confederatie Bouw
1,395 5. July 30, 2010 - Eiffarie SAS, the France based investment vehicle jointly established by
1,269 1,250 Eiffage SA and Macquaire infrastructure, has agreed to acquire the remaining 3.96%
1,055 stake in Societe des Autoroutes Paris-Rhin-Rhone SA (APRR), the listed France
705 699
based builder and operator of motorways, from its minority shareholders. The deal value
524 amounts to €243m.
6. August 2, 2010 - WS Atkins Plc, the UK based consultancy company, has signed a
35 41 50 35 38 34 36
definitive agreement to acquire The PBSJ Corporation, the US based construction
Average Enterprise value Median Enterprise value company for €223m.
2005 2006 2007 2008 2009 YTD LTM 7. July 6, 2010 - Rockwool International AS, the listed Denmark based producer of stone
Source: Mergermarket
wool, has agreed to acquire the Asian stone wool based insulation business from CSR
Limited, the listed Australia based company engaged in the manufacture and supply of
construction materials, sugar and aluminum for a deal value of €86m.
Yearly median EV/EBITDA multiples 8. August 13, 2010 - Assa Abloy AB, the listed Sweden based manufacturer of locks and
(E.U. M&A: Construction)
security systems has acquired Security Metal Products Corp. (SMP), the US based
company that manufactures hollow metal doors, frames and windows.
9. August 13, 2010 - YIT Corporation, the listed Finland based company that provides
construction and maintenance services, has agreed to acquire a 70% stake in Reding
A.S., the Slovakia based construction company, from Ladislav Versovsky, the Slovakia
8.5x 8.6x 9.5x 8.6x
7.1x 6.7x 6.9x based private investor.
Quarterly median EV/EBITDA multiples 2. August 27, 2010 - The internal management team of Waeyaert-Vermeersch Isolatie,
(E.U. M&A: Construction) the Belgian based distributor of thermal, acoustic and fire insulation, has acquired the
company in a management buy out transaction backed by Waterland Private Equity
Investments BV, the Netherlands based private equity firm.
3. August 12, 2010 - CRH Plc, the listed Ireland based building materials company
engaged in building materials, has acquired Sax Sanitair N.V., the Belgium based
9.5x 10.1x
8.7x 7.8x
9.0x
7.9x wholesaler of sanitary goods, from Ronald Kerckhaert, the Belgium based private
6.6x 6.9x
4.8x individual.
4. July 30, 2010 - Verhaeren Co N.V., the Belgium based road construction company and
Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10
a portfolio company of GIMV N.V., the listed Belgium based investment company, has
Median EV/EBITDA multiples acquired land & demolishing works, transport and asbestos removal divisions, from Jan
Source: Mergermarket
Stallaert N.V., a Belgium based road and other construction company.
5. July 10, 2010 - Besix, a privately-held Belgian construction group, has acquired 75% of
Belgian parking lot operator Parkeerbeheer from founder and full owner Dimitri Herbaut.
Besix will support further growth at Parkeerbeheer.
110%
100%
90%
80%
70%
60%
50%
30/09/2009 31/12/2009 31/03/2010 30/06/2010
DJ Eur 600 Construction & Materials DJ EuroStoxx 50
Source: Bloomberg
The new regulation implies that the simultaneous transfer, by the same party, of a building together with its piece of land, will be subject to
the same VAT treatment. Both the building and land will be subject to VAT (‘new’ building; option) or both are exempt from VAT (‘old’
building; no option). The VAT Administration is in the process of preparing its position on a number of questions which arose since the
change of the VAT Code at the end of 2009 in view of the implementation of this new regulation on the 1st of January 2011,
Land pertaining to a building refers to a piece of land with a building permit which is sold at the same time as the building. The fact
whether the piece of land is registered separately in the land register or not is irrelevant. In case no building permit for a concrete piece of
land exists, a transfer will remain subject to transfer taxes, even where the piece of land is transferred at the same moment as the
building. The VAT Administration’s position is expected to cover examples illustrating these principles.
A ‘sale on plan’ contract results in a timing difference between the transfer of the legal title of the land and the transfer of the legal title of
the building. In its plain form, the land is transferred at the moment of the notary deed, while the building is transferred gradually through
the construction process.
The VAT authorities would consider such as a sale to constitute two different transfers, taking place at different moments, and would
therefore not be subject to the new regulation which requires a simultaneous transfer of building and land. Hence, the piece of land in a
plain ‘sale on plan’ will remain subject to transfer taxes.
The capacity of the transferor (professional builder, optional VAT taxpayer, physical person, legal entity etc.) is irrelevant for the new
regulation.
The 'same person' must be interpreted in a strict sense. A simultaneous sale of land by a member A and the sale of the building on that
land by a member B, belonging to the same VAT group would therefore not be regarded as a sale by the ‘same’ person. The reason being
that the VAT group is not disclosed to the buyer and the fact that both members have to raise an invoice in their own name indicates that
the transfer is performed by two different persons.
Important to note is that the matter of how to treat a sale of a building and land by a VAT registered ‘temporary company’ (‘tijdelijke
handelsvennootschap’/’association momentanée’) is not yet resolved. This situation combines a single supply (i.e. by the ‘temporary
company’) with a transfer by separate persons (the ‘shareholders’ of the temporary company).
Anti-evasion regulation
Currently developers often sell the land and building using two separate legal entities, typically set up for economic and risk-related
reasons. This structure results in a situation where no VAT would be paid on the land because the transfer of the land is realised by a
different person than the transfer of the building. The issue is whether these structures would be regarded as a mean of tax-evasion under
the new regime.
The VAT Administration would confirm that when the transfer of the building and land by two related parties is part of a market practice
(explained by business reasons), would not be regarded as a mean of tax evasion, even when a developer would switch to this structure
in the framework of the new VAT regulation. Neither the combination of a sale of the land with a construction contract would not be
regarded as a mean of tax evasion.
The structure may be regarded as tax-evasion when the structure would be created for the essential purpose to avoid VAT on the land. A
typical case would be when the vendor has a single property and splits the building and the land purely in view of the subsequent sale.
Other situations besides these two cases described above may occur, however these would not be covered in the VAT Administration’s
position and will need to be judged on a case by case basis.
In order to avoid double taxation of VAT and registration duties, the VAT Administration would accept that registration duties and no VAT
will apply on the land, even if the delivery occurs after 1 January 2011, when the sale agreement (compromis) has been signed by both
parties in 2010. Hence, only registration duties will be due on the land. On the contrary, delaying the signing of the sale agreement
(compromis) to early 2011 when the buyer is entitled to recover VAT on the land could be considered as avoiding registration duties on the
land.
Currently, only buildings are subject to the VAT revision period of 15 years. This would imply that the land pertaining to that building would
fall under the shorter revision period of 5 years. However, a change of the legislation will resolve this issue, so that also the land will also
become subject to a 15 year VAT revision period.
Open questions
Not all questions have been solved. Especially the impact on agreements of financial lease (reconstitution of the invested capital: land part
to be included ?) and the vesting of a right in rem (application of the 95/97.5% rule also for the land part ?) has not yet been determined.
Ivan Massin
Director
Deloitte Belastingconsulenten
Reports
Construction
European powers of construction (EPoC) 2009
European powers of construction 2009, our seventh annual publication reviewing construction company performance, features a top
100 construction company listing; interviews with senior executives; a series of featured articles; and profiles which present key data
on market statistics, trends, top five construction companies, PPP/PFI and M&A activity.
Click here to read the full report.
Deloitte Review
Mergers & Acquisitions: The Complexities of a Buyers’ Market
Deloitte Insights podcast
As the economy recovers, companies will continue to rely on mergers and acquisitions (M&A) to bolster bottom-line performance and
fuel corporate development. At the same time, deal structuring is becoming increasingly complex. M&A deal teams have to consider a
variety of sometimes competing objectives in deal pricing, accounting, tax, management incentives and other elements. Getting the
deal done right is imperative, and company management, boards of directors and other key stakeholders are increasingly being held
accountable for results.
Click here to download the full podcast.
Lieve Creten
FAS Managing Partner
+32 (0)2 600 62 40
lcreten@deloitte.com
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