English
Published: 2003-07-04 07:00:05 CEST
YIT
Company Announcement
YIT BUYS ABB?S BUILDING SYSTEMS BUSINESS
YIT CORPORATION   STOCK EXCHANGE RELEASE  JULY 4, 2003  9.00 a.m.
1 (5)

YIT
BUYS ABB’S BUILDING SYSTEMS BUSINESS IN THE NORDIC COUNTRIES,
THE BALTIC
STATES AND RUSSIA

By an agreement signed today, YIT Corporation ("YIT")
has
purchased from ABB Ltd ("ABB") the company’s Building Systems
operations,
which offer technical building systems, property and
industrial services in
Finland, Sweden, Norway, Denmark, the
Baltic states and Russia. The value of
the acquisition is EUR 203
million. The cash amount to be paid in the
transaction will be
finalized when the deal is completed, whereupon the
negative
difference of the assets and liabilities of the balance sheet
items
being transferred in the asset purchase transactions will be
subtracted from
the transaction value. The transaction must be
approved by the competition
authorities before it enters into
force. The transaction is estimated to be
completed by September
1, 2003.

The acquired Building Systems business had
net sales in 2002 of
about EUR 1,130 million. The adjusted operating profit
before
financial items, taxes and amortization (EBITA), further corrected
for
the ABB Group’s internal charges, was about EUR 40 million.
The calculations
have been made on the basis of the figures
available to YIT. The figures for
Building Systems are based on
local GAAP accounting practice. The acquisition
value corresponds
to an EV/EBITA multiple of about 5 (EV = Enterprise Value).
The
number of personnel in May 2003 was 9,080.

The acquired business
together with the present YIT Building
Systems unit in Finland and Calor AB in
Sweden will form the
Group’s largest business segment, YIT Building Systems.
It will be
a central part of YIT’s core business, whose technical
and
financial performance will be developed in accordance with the
Group’s
strategy. Because the deal will not bring new capacity to
the local markets,
the competition situation will remain
unchanged.

The operations of YIT and
the acquired Building Systems business
in the Nordic countries complement each
other. Overlapping
operations are minimal. In Finland and Sweden the present
heating
and plumbing know-how of YIT’s Building Systems units will
be
complemented by the electrical and air conditioning expertise of
the
acquired Building Systems operations. Completely new markets
will open up to
YIT in Norway and Denmark. The acquisition will
strengthen YIT’s market
position. YIT will be able to offer its
customers improved and more
comprehensive services during the
entire life cycle of properties. YIT’s
maintenance network will
now cover all the Nordic countries.

Building
systems will account for a growing share of construction
costs and of the
repair and maintenance works for existing
properties. Automation along with
telecommunications technology
make up an ever-increasing proportion of
building services
equipment and systems. This is why building systems is a
major
growth area in YIT’s strategy both in Finland and the other
Nordic
countries.

The dependence of YIT’s net sales and earnings on the ups
and
downs of the business cycle has been purposefully reduced by
expanding
maintenance and upkeep operations within the company’s
different business
areas. Following the acquisition, the share of
maintenance and upkeep
operations within consolidated net sales is
estimated to rise, gauged by the
previous year’s net sales
breakdown, to about 30 per cent, against 25 per cent
of YIT’s
total net sales in the first quarter of 2003.

“This acquisition
will make YIT a major and genuinely Scandinavian
service company whose local
subsidiaries deploy domestic resources
to serve our customers in over 500
regional offices in all the
Nordic countries, the Baltic states and Russia,ö
observes Group
CEO Reino Hanhinen.

YIT’s post-acquisition net sales

In
2002, YIT had consolidated net sales of EUR 1,763 million. The
net sales of
the acquired Building Systems business in the Nordic
countries totalled about
EUR 1,130 million in 2002. Combining
YIT’s figures for 2002 with the figures
of the acquired Building
Systems operations puts YIT’s post-acquisition net
sales at about
EUR 2,890 million, which would be divided among the
different
business segments as follows: Building Systems about EUR
1,520
million, or 52%; Construction Services EUR 1,086 million, or
37%;
Services for Industry EUR 230 million, or 8% and Telecom Services
EUR 78
million, or 3% (part of the YIT Group from June 1 to
December 31, 2002). The
aim of combining the figures is to give an
operational overview of the new
entity.

By country, the net sales breakdown according to 2002 net
sales
figures would be as follows: Finland EUR 1,670 million, the
other
Nordic countries EUR 1,040 million, Baltic states EUR 110
million,
Russia EUR 40 million and other countries EUR 20 million.

The
number of employees will rise to nearly 21,700

“An important consideration
in arriving at the deal was ABB
Building Systems’ positive technology image
and the professional
skill of its personnel,ö says Group CEO Reino Hanhinen.
The
continuous development of the personnel and operations are
central
elements of YIT’s key performance objectives. YIT is well placed
to
carry out integration of the personnel and operations because
the Group has
experience and a proven track record of successfully
handling the integration
aspects of previous acquisitions.

The YIT Group’s personnel numbered 12,600
employees at the end of
May 2003. Following the acquisition, the Group’s
personnel
strength will rise to 21,680 employees. The acquired
Building
Systems business has a staff of 9,080 employees. The breakdown
by
country is as follows: Finland 2,300, Sweden 2,900, Norway 2,700,
Denmark
950, the Baltic states 200 and Russia 30.

Financial effects of the
acquisition

YIT will finance the acquisition with debt capital. As
a
consequence of the acquisition, the company’s equity ratio will
fall. YIT’s
objective is to restore the equity ratio to the target
level in 2006 at the
latest. YIT’s strategic target level for the
equity ratio is 40%, with an
average growth target of 5–10% a
year, a return on investment of 18% and a
dividend payout of
30–50% of profit after taxes and minority interests. It
is
estimated that the effect of the deal on earnings per share will
be
positive beginning in 2004. The Building Systems business is
characterized by
a strong cash flow generation, low investment
requirements and a good return
on investment.

YIT estimates that the acquisition will annually yield
synergy
benefits of about EUR 10 million beginning in 2004. The
synergy
benefits will come primarily in the areas of
purchasing,
administration and information technology as well as
through
technology transfer between existing and new units. “With
increased
resources, we’ll be able to offer our customers
integrated deliveries with
expanded content as well as large-scale
projects in the Nordic countries and
their nearby areas,ö explains
Group CEO Reino Hanhinen.

The integration
costs are estimated to come to about EUR 6 million
in 2003 and 2004. The main
items making up the integration costs
are information technology, changing the
external identity and
training for the personnel. In Sweden, measures to
improve
operational profitability are continuing. The objective is
to
generate a profit in 2004.

The acquisition of the Building Systems
operations in Finland,
Norway, Denmark, Estonia and Latvia will be carried out
as asset
purchases. In Sweden, Russia and Lithuania, the entire
shares
outstanding of the local companies will be purchased. The purchase
of
the business operations will result in tax-deductible goodwill
of about EUR
180 million. The goodwill is to be amortized over 10
years, with the exception
of Denmark, where a 7-year amortization
period is used. It is estimated that
the Building Systems
operations will be consolidated within YIT on September
1, 2003.

Group structure and organization

Via the acquisition, YIT’s
Group structure will change. The
Group’s operations will be divided into four
divisions: Building
Systems, Construction Services, Services for Industry and
Telecom
Services.

The acquired Building Systems operations in the Nordic
countries
together with the present YIT Building Systems unit in Finland
and
Calor AB in Sweden will form the Building Systems business
segment, whose
parent company is YIT Building Systems Ltd. Also to
be placed within it are
YIT Rapido Property Management Services
Ltd and YIT Primatel Ltd’s property
networks business. Building
Systems will be YIT’s largest business segment in
terms of net
sales and number of employees. YIT Construction Ltd will
be
responsible for construction services. Investment and upkeep
services for
industry will be offered by YIT Industria Ltd and YIT
Service Ltd. YIT
Primatel Ltd will offer telecom infrastructure
services.

The president of
YIT Building Systems Ltd will be the present
president of YIT Installation
Ltd, Juhani Pitkäkoski, LL M (45)
and its executive vice president will be
YIT’s present Vice
President, Corporate Planning, Sakari Toikkanen, Lic.
(Tech.)
(35). The management of YIT Building Systems Ltd will
be
headquartered at YIT’s head office in Helsinki’s Käpylä district.

YIT
Building Systems business segment will be divided into
operations in Sweden,
Finland, Norway and Denmark. Operations in
Finland will also comprise the
operations in the Baltic states and
Russia. The present president of Calor AB,
Kari Kallio,
M.Sc.(Eng.) (53), will be responsible for the Building
Systems
operations in Sweden. The president of the Finnish subsidiary
YIT
Building Systems Ltd will be the head of ABB Oy’s Building
Systems
Finland, Antti Rantanen, M.Sc.(Eng.) (57) and the executive
vice
president will be the present president of YIT Huber Ltd,
Pekka
Hämäläinen, M.Sc.(Eng.) (51). The president of the Norwegian
subsidiary
YIT Building Systems AS will be the present head of ABB
Building Systems
Norway, Arne Malonæs, M.Sc.(Eng.) (45) and the
president of the Danish
subsidiary YIT Installation AS will be the
present head of ABB Building
Systems Denmark, Leo G. Sørensen,
M.Sc.(Eng.) (50).

Ilpo Jalasjoki, (52),
M.Sc.(Eng.), will continue as president of
YIT Construction Ltd. Services for
Industry will be headed by
Raimo Poutiainen, (49),  M.Sc.(Eng.), who will also
continue as
president of YIT Industria Ltd. Juha Moisio, (49),
M.Sc.(Eng.),
will continue as president of YIT Service Ltd and Hannu
Leinonen,
(41), M.Sc.(Eng.), will continue as president of YIT Primatel
Ltd.
Juha Kostiainen, M.Sc.(Eng.), D.Sc.(Admin.) (38) has been
appointed
YIT’s Vice President, Corporate Planning. He has been
responsible for
development activities in YIT Construction Ltd.
Pitkäkoski, Jalasjoki,
Poutiainen, Leinonen and Kostiainen as well
as Executive Vice President Esko
Mäkelä and Vice President,
Corporate Communications, Veikko Myllyperkiö, will
report to Group
CEO Reino Hanhinen.

The main details of the Group structure
and country-specific
organizations are available on our website at the
address:
www.yit.fi.



Press conference and event for analysts on July 4,
2003

A press conference on the transaction will be held in Helsinki
at
11.00 a.m. (Finnish time) at Scandic Hotel Simonkenttä, Simonkatu
9.

An
event for securities analysts and investors will be arranged at
1.00-2.00 p.m.
Finnish time in Helsinki, Scandic Hotel
Simonkenttä, Simonkatu 9. Group CEO
Reino Hanhinen’s and Executive
Vice President Esko Mäkelä’s presentations at
the event can be
viewed as a direct webcast in English at 1.00 p.m. Finnish
time at
the address www.yit.fi. A telephone conference will follow
the
presentations. The material for the presentation as well as
the
corresponding recorded webcast presentations in Finnish and
Swedish with
the related material can also be found at the address
www.yit.fi.

YIT
CORPORATION


Veikko Myllyperkiö
Vice President, Corporate
Communications

YIT offers investment and upkeep services for housing,
work
environments, the public sector, industry and telecommunications.
In all
sectors of operations, the Group’s services cover the
entire life cycle of
projects. YIT’s main market areas are
Finland, Scandinavia, the Baltic states
and Russia. YIT’s strategy
for building an international presence is to
strengthen the market
position of YIT Building Systems in the Nordic countries
and the
market position of YIT Construction and YIT Primatel in the
Baltic
states and Russia. YIT’s share has been listed on Helsinki
Exchanges
since September 4, 1995. The share is quoted on the Main
List under the Other
Services heading.

Building Systems, with operations throughout Scandinavia,
will be
an integrated supplier of HEPAC, electrical and automation
services
and systems spanning the property’s entire life cycle.
The property services
it offers will ensure high-quality and
overall cost-effective upkeep and
facility management services for
buildings and business locations. Building
Systems will provide a
local capability for offering information technology
and
telecommunications services as well as services for industry and
system
deliveries in all the Nordic countries as well as in the
Baltic states and
Russia.

For additional information, contact:
Group CEO Reino Hanhinen, YIT
Corporation, tel. +358 20 433 2454,
reino.hanhinen@yit.fi
Executive Vice
President Esko Mäkelä, YIT Corporation, tel. +358
20 433 2258, mobile +358 40
826 1199, esko.makela@yit.fi
Veikko Myllyperkiö, Vice President, Corporate
Communications, tel.
+358 20 433 2297, veikko.myllyperkio@yit.fi
Director of
Corporate Planning Sakari Toikkanen, YIT Corporation,
tel. +358 20 433 2336,
sakari.toikkanen@yit.fi
President Juhani Pitkäkoski, YIT Installation Ltd,
tel. +358 20
433 3738, juhani.pitkakoski@yit.fi
Petra Thorén, Manager,
Investor Relations, YIT Corporation, tel.
+358 20 433 2635, mobile +358 40 764
5462, petra.thoren@yit.fi

For additional information, see:
www.yit.fi

DISTRIBUTION:  Helsinki Exchanges, principal media,
www.yit.fi