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M&A in the European Construction Industry

Editors: Sigl-Grüb, Christof | Schiereck, Dirk | Voigt, Christian

Rheingauer Monographien

(2007)

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Abstract

This book is a compilation of articles which emerged from the »Project Course M&A – the European Construction Industry« in the summer term 2006, a course offered to 8th semester students at the European Business School (ebs).

Table of Contents

Section Title Page Action Price
Preface 3
Contents 5
Part I: Performance and Valuation 7
Fabian Bramisch / Sebastian Markowsky: Chapter 1 Value Drivers of the European Construction Industry 9
Contents 10
1 Introduction 10
1.1 Problem and Purpose 10
1.2 Structure of the Analysis 11
2 Fundamentals and Basic Theories 11
2.1 Value Driver 11
2.2 Previous Literature Review 12
3 Rational for WCM 13
3.1 Relevance 13
3.2 Components of WCM 14
4 Empirical Analysis 15
4.1 Research Questions and Hypotheses 15
4.2 Procedure 16
4.3 Selection of Sample and Data 17
4.4 Description of the Analysed Figures 17
4.5 Results 17
4.6 Limitations of the Study 21
5 Conclusion and Future Fields of Research 21
References 23
Appendix 27
Sonja Blankenburg / Astrid May: Chapter 2 Long-term Performance of Different Business Models in the European Construction Industry 31
Contents 32
1 Introduction 32
1.1 Problems and Objectives 32
1.2 Course of Analysis 33
2 Basic Concepts 34
2.1 Construction Industry 34
2.2 Business Models 35
3 Performance Analysis 36
3.1 Different Business Models 36
3.2 Comparison of Models 37
3.3 Geographic and Economic Differences 40
3.4 Philipp Holzmann AG 41
3.5 Possible Explanations 42
4 Set of Opportunities 47
4.1 Improvement 47
4.2 Threats 49
5 Conclusion and Outlook 50
References 52
Appendix 56
Christian Βöhm / Stephan Freud: Chapter 3 Multiples Valuation in the European Construction Industry 65
Contents 66
1 Introduction 66
2 Approach of the Study 67
3 Theoretical Review 67
4 Comparable Company Valuation 70
4.1 Data Sample and Hypotheses 70
4.2 Financial Value Driver Analysis 70
4.3 Multiple Valuation 73
5 Precedent Transactions Valuation 75
5.1 Data Sample and Hypotheses 75
5.2 Financial Value Driver Analysis 75
5.3 Transaction Segmentation Analysis 77
6 Concluding Remarks 80
References 82
Appendix 83
Part II: Economic Perspectives 93
Bhupinder S. Brar / Sylvain Fondeur: Chapter 4 The Economic Importance of European Construction Industry 95
Contents 96
1 Introduction 96
2 Market Analysis 97
3 Market Segmentation 98
3.1 Residential 99
3.2 Non-Residential 100
3.3 Civil-Engineering 100
4 Market Forecast 101
5 Competitive Environment 101
6 Qualitative Overview 102
6.1 Germany 102
6.2 France 103
6.3 Spain 104
6.4 United Kingdom 104
7 Impact Factors 105
7.1 Economic Environment 105
7.2 Commodity Prices 106
7.3 Stability and Growth Pact 106
7.4 Public Private Partnerships 107
7.5 Environment Obligations 107
7.6 Demographic Trends 108
8 Conclusion 108
References 109
Appendix 110
Cowan Phan Siang Pu / Louise De Waal: Chapter 5 Macroeconomic Determinants of Long-term Performance in European Countries 111
Contents 112
1 Introduction 112
1.1 Aim of the Paper 112
1.2 Course of the Analysis 113
2 Links between GDP and Growth 114
2.1 GDP 114
2.2 Governmental Expenditure 115
2.3 Domestic Expenditure 116
2.4 Investment Expenditure 119
2.5 Exchange Rates 122
3 Conclusion 123
References 126
Appendix 130
Part III: Short Term Performance of M & A 133
Alexander S. Peters / Philipp Schäfer: Chapter 6 Event Study: M & A Announcement Effects on Bidders in the European Construction Industry 135
Contents 136
1 Introduction 136
1.1 Objective of the Study 136
1.2 Course of the Study 137
2 Theoretical Framework 137
2.1 Review of Literature 137
2.2 Derivation of Hypotheses 139
3 Empirical Analysis 141
3.1 Methodologies 141
3.2 Data Sample 144
3.3 Results 146
4 Summary and Conclusion 150
References 152
Sebastian Becker / Franz Jaeger: Chapter 7 Event Study: M & A Announcement Effects on Targets in the European Construction Industry 157
Contents 158
1 Introduction 158
1.1 Objective of the Study 158
1.2 Course of Analysis 159
2 Literature 159
2.1 Review of Literature 159
2.2 Derivation of Hypotheses 161
3 Event Study 164
3.1 Methodology 164
3.2 Data Selection and Sample Description 166
3.3 Empirical Results 166
4 Summary and Conclusion 177
References 179
Appendix 184
Florian Jope / Otto von Troschke: Chapter 8 Event Study: M & A Announcement Effects on Rivals in the European Construction Industry 191
Contents 192
1 Introduction 192
1.1 Motivation of the Study 192
1.2 Course of Analysis 193
1.3 Related Literature 193
1.4 Theories on Competitive Effects 194
2 Empirical Analysis 196
2.1 Selection Procedure 196
2.2 Individual Rival Set Selection 197
2.3 Event Study Methodology 198
2.4 Univariate Analysis & Results 199
2.5 Multivariate Regression & Results 206
3 Conclusion 207
References 209
Appendix 211
Christian Geßner / Martin Renze- Westendor: Chapter 9 Are M&A-Advisors Value Drivers in the European Construction Industry? 217
Contents 218
1 Introduction 218
2 Literature Review 219
2.1 Theoretical Concepts 219
2.2 Literature Review 220
2.3 Research Hypotheses 221
3 Empirical Evidence 222
3.1 Data Sample 222
3.2 Event Study Methodology 223
3.3 Empirical Evidence 226
4 Summary and Conclusion 237
References 239
Appendix 242
Part IV: Case Studies 251
Marie Kathrin Pleus / Anna Quitt: Chapter 10 Mergers and Acquisitions in the European Construction Industry: The Case of Hochtief and Turner 253
Contents 254
1 Introduction and Course of the Study 254
2 The Market Environment 255
2.1 The European Construction Market 255
2.2 The German Construction Market 256
2.3 The US Construction Market 257
3 Portrait two Protagonists 258
3.1 Turner Construction Corporation 259
3.2 Hochtief 260
3.3 Strategic Rationale 263
4 The Transaction 265
4.1 Key Facts and Course of Transaction 265
4.2 Multiple Analysis of the Transaction 265
5 Market Reactions to the Acquisition 266
5.1 Calculation of Abnormal Returns 266
5.2 Market Reaction for Hochtief 267
5.3 Market Reaction for Rivals 268
6 Post-Merger Integration 269
7 Final Evaluation of the Transaction 270
References 272
Appendix 275
Benjamin Krapf / Cornelius Voge: Chapter 11 Case Study: The Acquisition of Abigroup Ltd. by Bilfinger Berger AG 279
Contents 280
1 Introduction 280
2 Company Profiles 281
2.1 The Buyer: Bilfinger Berger 281
2.2 The Target: Abigroup 282
2.3 Comparison: Facts and Figures 283
3 The Deal 283
3.1 Deal Structure and Course of Events 283
3.2 Announcement Effects 285
3.3 Multiple Analysis 288
4 Rationale Behind the Deal 290
5 Ex-post Evaluation 290
5.1 Deal Valuation 290
5.2 Future Outlook 292
6 Conclusion 292
References 294
Appendix 296