The company, which employs about 23 000 people in The Netherlands, the UK, Germany and the rest of the world, issued protective shares on Tuesday to fend off Dutch dredging contractor Boskalis.
The manoeuvre – known as a “poisoned pill” – effectively makes HBG safe from another hostile bid because one of its subsidiaries, Stichting HBG, now has 50% of the company’s voting shares.
Any company looking to buy HBG would have to acquire more than half of its total shares.
But analysts say a number of investors in HBG are “spitting blood” at the poison pill, adding that the company’s management is now under severe pressure to rationalise all its businesses.
This is likely to mean job losses at the company’s four UK-based construction subsidiaries: Higgs & Hill, Kyle Stewart, GA and civils arm Edmund Nuttall.
They have to prove to shareholders that their share price is not going to plunge analyst
One analyst said: “They now have to do everything possible to prove to their shareholders that they are making drastic improvements and that their share price is not going to plunge.” He added: “The UK business, along with the others, will have to sweat even harder.”
HBG does about £800m of construction in the UK every year. The British businesses are regarded as relatively successful and make margins after tax of more than 2%.
However, HBG’s profit has been badly dented by what analysts describe as the “disastrous” acquisition of Germany’s ninth largest contractor Wayss & Freytag for £81m in 1996. Losses and write-downs at the new business caused HBG’s shares to fall sharply. This has made HBG a target for predators.
Boskalis is thought to have been in talks with HBG for 18 months. Analysts believe that relations between the two have broken down, although Boskalis could still try to broker an agreed bid. The other possibility is that a “white knight” could emerge.
The analyst said: “It seems HBG are prepared to do anything to avoid being taken over. But they will now have to try harder to improve group wide to compensate for the situation at Wayss & Freytag.”