Nippon Koei has offered a £268.1m deal, which at 680p per share is 30p per share better than the deal Hyder previously agreed with Arcadis.
On 31 July the Hyder boad announced that it was unanimously recommending its shareholders to accept a £256.2m takeover offer from Arcadis. (See previous report here.) Today they tell us that actually they prefer the Japanese takeover offer, which includes a promise to be left structurally unaltered.
Hyder chief executive Ivor Catto said: "The cash offer from Nippon Koei announced today represents a 30p premium to Arcadis’ offer announced on 31 July 2014 and accordingly the Hyder board is now recommending the cash offer from Nippon Koei. The Hyder board considers that Nippon Koei's cash offer substantially recognises Hyder's growth prospects, and provides certainty, in cash, to our shareholders today. The merged group should also provide further opportunities for our highly valued employees and clients."
Nippon Koei is listed on the Tokyo Stock Exchange with a market capitalisation of approximately £260m. For the year ended 31 March 2013, it had revenues of approximately £420m and EBITDA of £34m. This makes it a similar size to Hyder, which had £256m net revenues last year and made an adjusted operating profit of £19m.
Nippon Koei president Noriaki Hirose said: "This merger represents a truly transformational step for Nippon Koei, fulfilling founder Yutaka Kubota's long term strategic vision of broadening the client base and geographic footprint of Nippon Koei, whilst continuing to focus on our core sectors of transportation, utilities and property. Both Nippon Koei and Hyder operate in the same part of the design and engineering consulting value chain. In short, our chairman (Yoshihiko Tsonoda) and I could not envisage a better business for us to merge with.”
He continued: “I regret that the confidential nature of our interest has meant that we have not yet had the opportunity to meet many of the employees of Hyder and begin planning our combined journey together. We recognise the value of collaboration and so I look forward to addressing this as soon as possible. A key element of our due diligence has been understanding the depth of Hyder's engineering capability and the skills of its people, and we have been most impressed with what we have learned.
“Like Hyder, Nippon Koei is a longstanding company with a rich heritage in engineering. We are conservatively run, with the same focus on clients and quality. We rarely make acquisitions but, having studied Hyder carefully, we are clear how important and strategic this merger is for us.
“Given the success of both organisations, we intend to make minimal changes to the existing operating structures of either organisation and are excited about the prospect of capturing cross selling and other revenue generating opportunities as a combined business."
Arcadis responded to the news by saying that it was “considering its position and will make an announcement in due course”.