The board of directors of Veidekke has mandated the group management to prepare a plan for how a split of Veidekke into two entities can be carried out in order to provide the best possible basis for growth and development in its business units and to optimise shareholder value over time. In the opinion of the board of directors, Veidekke's current valuation does not fully reflect the value of today's business and a split is believed to contribute to increasing the company's shareholder values. This is supported by a recently received request from a serious player with a specific interest in purchasing the property development operation.
The driving forces for value creation for the property development operation diverge from those of Veidekke’s other business areas. Changes in the organisation and ownership structure will expand the operational and financial scope for action. The mandate provided by the board of directors implies that alternatives under consideration include a stock exchange listing, distribution of the shares to Veidekke's shareholders, and divestment of all or part of the property development operation. Veidekke has retained ABG Sundal Collier and the law firm Schjødt as the company's financial and legal advisers.
“Veidekke continuously strives to optimally develop and position all our business areas for long-term strategic and financial success. A split of Veidekke into two focused entities will enable each entity to pursue growth strategies tailored to their markets, resulting in profitable growth that creates value for customers, employees and shareholders alike, says Jimmy Bengtsson, CEO of Veidekke.
“After many years of solid growth and profits, Veidekke is at a crossroads where we believe further development is best safeguarded through two independent companies. The board’s decision thus marks a major step forward in facilitating increased long-term value creation for Veidekke's shareholders, says Svein Richard Brandtzæg, board chair of Veidekke.
Veidekke's property development operation is one of Scandinavia's largest residential developers, with a land bank of more than 18,000 units in and around the largest population centres of Norway and Sweden. As at 30 September, the book value of the company's assets was NOK 8.2 billion and total invested capital amounted to NOK 6.6 billion. At year-end 2018, Veidekke estimated the market value of the land plots owned by the company to significantly exceed the book value, with excess value being mainly related to the Norwegian property development operation. The company has initiated recalculation of the value of the total land bank and residential portfolio.
“The time has come to give the property development operation a more independent role. Establishing two separate entities could provide a more optimal financing structure and scope, and thus facilitate increased value creation and growth for both entities,” says Jørgen Wiese Porsmyr, Executive Vice President and responsible for project development in Scandinavia.
The board expects to make a final decision on the transaction model in the first half of 2020. Additional information about Veidekke’s property development operation will be integrated in the company’s third quarter 2019 presentation, which will be published tomorrow.
Key figures Veidekke’s property development operation (Veidekke’s share):
| Q3 19 | Q2 19 | Q1 19 | Q4 18 | Q3 18 | 2018 | |
| Number of units sold | 170 | 206 | 274 | 161 | 153 | 567 |
| Norway | 68 | 75 | 162 | 52 | 73 | 288 |
| Sweden | 102 | 131 | 112 | 109 | 80 | 279 |
| Number of units under construction | 1 676 | 2 144 | 2 214 | 2 116 | 2 189 | 2 116 |
| Norway | 932 | 785 | 643 | 599 | 576 | 599 |
| Sweden | 744 | 1 359 | 1 571 | 1 517 | 1 613 | 1 517 |
| Number of units in land bank | 15 100 | 14 700 | 14 800 | 15 100 | 15 340 | 15 100 |
| Norway | 5 000 | 5 200 | 5 300 | 5 400 | 5 350 | 5 400 |
| Sweden | 10 100 | 9 500 | 9 500 | 9 700 | 9 990 | 9 700 |
| Sales ratio, units under construction | 81% | 84% | 84% | 80% | 80% | 80% |
| Invested capital (NOK bill.) | 6.6 | 6.1 | 6.1 | 4.7 | 4.1 | 4.7 |
| Return on invested capital (12m) | 10.1% | 10.2% | 10.2% | 11.3% | 10.6% | 11.3% |
| Revenue 12m (NOK mill.) | 3 083 | 2 953 | 2 984 | 2 899 | 2 738 | 2 899 |
| Profit before tax 12m (NOK mill.) | 410 | 396 | 373 | 388 | 339 | 388 |
For more information, please contact:
EVP Project Development Scandinavia Jørgen Wiese Porsmyr, tel. +47 907 59058, jorgen.wiese-porsmyr@veidekke.no
EVP Communications and Public Affairs Lars Erik Lund, tel. +47 413 31 369, lars.lund@veidekke.no
SVP Finance Jørgen G. Michelet, , tel. +47 917 43 856, jorgen.michelet@veidekke.no
For press images, see https://veidekke.fotoware.cloud/fotoweb/archives/5028-Pressebilder-Veidekke/
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This information is subject to a disclosure duty pursuant to section 5-12 of the Securities Trading Act.
Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. The company is known for its involvement and local knowledge. Its annual turnover is approximately NOK 36 billion, and half of its 8,600 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.