(Oslo, 26 March 2007) Block Watne Gruppen ASA ("BWG") through a newly established Swedish wholly owned subsidiary, has entered into an agreement to acquire the leading Swedish residential house builder Prevesta AB ("Prevesta") from the Industri Kapital 2004 Fund ("Industri Kapital") and Prevesta's management. The agreed purchase price for Prevesta is SEK 1 900 million (NOK 1 731 million) on a cash and debt free basis ("enterprise value").

 

Prevesta has 530 employees and had revenues in 2006 of NOK 1 530 million and an EBIT of NOK 150 million.

 

The purchase price amounts to SEK 1 900 million (NOK 1 731 million) on a cash and debt free basis ("enterprise value") and will be financed through a combination of 6 502 242 new BWG shares to be issued to the sellers of Prevesta and approximately SEK 1 600 million (NOK 1 460 million) in cash including refinancing of existing debt in Prevesta. The entire purchase price is fully financed through committed credit facilities. The completion of the acquisition is not conditional upon approval of the annual general meeting in BWG due to the committed financing.

 

The board of directors of BWG will recommend to its annual general meeting to be held 18 April 2007, to approve the directed issue of the 6 502 242 BWG shares to the sellers of Prevesta as well as a further share issue in the amount of NOK 500 - 800 million expected to be carried out in the second quarter of 2007. The proceeds from the share issue will be used to repay parts of the acquisition credit facilities.

 

Newly issued shares will not carry any rights to the NOK 2.50 per share dividend for the financial year 2006 proposed by the board of directors of BWG.

 

Lars Nilsen, the main owner and CEO of BWG, has through his wholly owned companies Lani Industrier AS, Lani Development AS and Lagulise AS, undertaken to vote for his entire holding in favour of the share issues commented above. Through these three companies, Lars Nilsen represents 50.13 per cent of the shares and votes in BWG.

 

Closing of the transaction is conditional upon the Financial Supervisory Authority in Sweden and the Commissariat aux Assurances (Insurance Regulatory Authority) in Luxembourg approving the indirect change of ownership of two insurance companies, Gar-Bo Försäkring AB in which Prevesta owns 33.6 percent which in turns owns Agat Re SA. These two companies are owned jointly with other house developers in the Swedish market. BWG and Industri Kapital foresee no reason for such approvals not being granted within two months from when applications have been submitted to the relevant regulatory authorities. The applications will be submitted within one week from today, and closing of the transaction will take place shortly following the receipt of such approvals.

 

The transaction will not require filing with any competition authorities.

 

- BWG has on several occasions communicated its intention to actively participate in the consolidation of the fragmented Scandinavian residential house building market. Furthermore, BWG has communicated that the next logical step could be an entry into the Swedish market. BWG now acts on these intentions and takes a great leap in the consolidation of the Scandinavian residential house building market and simultaneously establishes BWG as the market leader within this market, comments Lars Nilsen, CEO of Block Watne Gruppen.

 

- Prevesta, with its brands Myresjöhus and SmålandsVillan, fulfils the criteria we have defined for our acquisition evaluation process. Prevesta's management has managed to turn the company into a high performer over the last years. Management has also displayed an ability to handle growth without margin erosion and has created a sound operation. BWG's acquisition of Prevesta rests on a strong industrial logic and will support our future profitable growth, Lars Nilsen further comments.

 

- Prevesta has been a fantastic investment for us. During Industri Kapital's ownership the company has improved its financial performance and has strengthened its position in Sweden to become the leading producer of single-family houses. The recent investments and restructuring efforts have also created the foundation for further growth and profitability for the company. We are also pleased to become a significant owner in BWG and are impressed with BWG's strong performance during the past few years. The combined company has excellent prospects for further successful growth and development, comments Michael Rosenlew, responsible partner at Industri Kapital.

 

- Industri Kapital has been a good owner. The recent years have been an exciting time for the company and the restructuring effort during Industri Kapital's ownership has resulted in considerable investments and a strong financial performance. We are pleased that the new owner of Prevesta will be BWG, a successful industrial partner with a long-

term focus. The two companies complement each other well in particular in terms of know-how and market positions and we look positively on the future, comments Mikael Olsson, CEO of Prevesta AB.

 

Prevesta, Sweden's leading producer of prefabricated houses, with the highly recognized brands Myresjöhus and SmålandsVillan, is headquartered in Myresjö in the province of Småland. Since its inception in 1927, Prevesta has delivered more than 80 000 houses primarily in the Swedish market. In 2006, the Group had a turnover of SEK 1 756 million (NOK 1 530 million) and an operating profit of SEK 173 million (NOK 150 million). In addition Prevesta had an income from associates (Gar-Bo Försäkring AB) of SEK 18.5 million (NOK 16.1 million). The company has production facilities in Myresjö, Vrigstad and Sundsvall and currently has approximately 530 employees.

Prevesta's operations are divided into two business areas:

 

Myresjöhus: Development, production and marketing of prefabricated houses under the Myresjöhus brand for primarily the Swedish market, including both single family houses and housing estates.

 

SmålandsVillan: Development, production and marketing of prefabricated houses using volume techniques under the SmålandsVillan brand for primarily the Swedish market.

 

For further financial information on Prevesta, please refer to the pro forma financial information included with this press release.

 

BWG has for a period of time evaluated potential strategic opportunities in Scandinavia. Prevesta, with its highly recognized brands Myresjöhus and SmålandsVillan, and its healthy operational and financial performance, fulfils the criteria BWG has defined for attractive acquisition targets. These criteria are:

 

High quality in management

Sound historical operational and financial performance

Strong brand names and product portfolio

Focus on similar market segments 

Financially attractive for BWG's shareholders; also on a stand-alone basis

 

Prevesta is market leading in the Swedish market and also possesses the strongest brand in the market - Myresjöhus. Myresjöhus targets the same market segment as regards house size and price in Sweden as BWG does in Norway; affordable quality housing in the outskirts of cities and pressure areas.

 

Prevesta's other brand, SmålandsVillan, targets the highly standardized and affordable segment of the market, similar to the segment that BWG is considering for the Hetlandhus brand in Norway.

 

The most distinct differences between the Norwegian and Swedish operational models are prefabrication and the development of residential projects on own accounts.

 

Block Watne AS has no prefabrication and the houses are built on site by carpenters employed by the company. For Myresjöhus, approximately 80 per cent of total house construction is on site and around 20 per cent is prefabricated. The corresponding figures for SmålandsVillan are 20 per cent on site and 80 per cent prefabrication. Following the acquisition of Prevesta, approximately 80 per cent of BWG's total house building will be built on site and approximately 20 per cent based on prefabrication.

 

Over 90 per cent of Block Watne AS' sales are derived from residential project development where Block Watne AS controls the whole value chain including acquisition of land, development of the project, selling and constructing of the houses to end customers. For Myresjöhus approximately 40 per cent of the business is residential project development. A majority of the deliveries are turn-key solutions based on contractual work carried out by sub suppliers. SmålandsVillan is entirely single-family houses on the customers' own property. For the combined Block Watne and Prevesta, approximately 60 per cent of the volume will be residential project development.

 

BWG will seek to utilise the synergy potential between its Norwegian and Swedish subsidiaries including:

 

As a result of strong growth in the building market in recent years, there is currently a squeeze on resources. Synergies are hence expected be realized over a longer period of time than could have been expected in a "normalized market".

 

Industri Kapital has entered into a six month lock-up agreement from the closing of the transaction for its BWG shares. All management shareholders of Prevesta have similarly entered into a 12 month lock-up agreement from the closing of the transaction for its BWG shares.

 

Access Partners acted as financial advisor and White & Case Advokat AB and Thommessen Krefting Greve Lund have acted as legal advisors to BWG. KPMG Transaction Services assisted in the financial due diligence process.

 

Lars Nilsen, CEO, Block Watne Gruppen ASA, tel: +47 23 24 60 00

Ketil Kvalvik, CFO, Block Watne Gruppen ASA, tel: +47 90 77 13 15

 

Ranked as one of Norway's leading housebuilders, BWG covers the purchase and development of sites as well as the construction and sale of dwellings to private buyers. BWG has built over 84 000 homes in total, and completes more than 1 000 new houses a year and has a stock of building land corresponding to some 12 000 dwelling units.

 

Around 400 of its 600 employees are skilled carpenters working in specialised teams. Each house is built from scratch using well-proven and cost-effective methods developed over many years. BWG operates from 21 regional offices around Norway, with the emphasis on attractive housing developments outside the most densely-populated areas.

 

BWG 2006 turnover was NOK 1 529 million (approximately EUR 187 million) and the operating profit (EBIT) was NOK 241 million (approximately EUR 29 million), corresponding to an operating margin of 15.7 per cent.

Block Watne Gruppen was listed on Oslo Børs in March 2006.

 

The pro forma accounts have been prepared to illustrate the effects of the consolidation of Prevesta had the transaction been completed on 1 January 2006. For principles applied and more details please refer to the enclosed supplementary information.

 

 

 

The pro forma income statement and balance sheet shown above includes the issue of
6 502 242 BWG shares to the sellers of Prevesta and cash/debt financing of the remaining purchase price.

The information contained herein is not for publication or distribution in or into the United States of America. The materials do not constitute an offer of securities for sale in the United States, nor may the securities be offered or sold in the United States absent registration or an exemption from registration as provided in the Securities Act of 1933, as amended, and the rules and regulations there under. There is no intention to register any portion of the offering referred to herein in the United States of America or to conduct a public offering of securities in the United States of America.

 

The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption of registration or qualification under the securities laws of any such jurisdiction.