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Munich, 7/17/2008

BIS AG acquiring Texan service provider; US revenues doubled as a result

Potential in the greater Houston region providing further opportunities for growth

With the acquisition of industrial service provider Tepsco L.P., Houston, Texas, Bilfinger Berger Industrial Services AG (BIS AG) is strengthening its position in the US industrial services market. At the same time, its US revenues have risen to over USD 500 million. Accordingly, the Company will figure as a key market operator in the Texas / Louisiana region in particular with very bright prospects for continued growth. 

The acquisition agreement was signed yesterday in Houston, Texas. The seller is financial investor Churchill Equity. The parties have agreed not to disclose the purchase price. “Tepsco is a focused industrial services provider with a strong customer base comprising oil, gas and petrochemical majors in the greater Houston region. Accordingly, it is an ideal fit for our Group,” explains Thomas Töpfer, CEO of BIS AG. “In this way, we are strengthening our market position in this key industrial region and harnessing further growth potential.”

With 1,100 employees, Tepsco generates annual revenues of around USD 270 million and is characterized by strong growth and high profitability. Its customers and management alike welcome the company’s acquisition by BIS AG. Tepsco was originally spun off from the Tellepson Group in 2002, establishing itself as an industrial services provider thanks to its commitment to quality, reliability and safety. The services which it provides primarily entail extensions to and the conversion of industrial assets in the oil, gas and petrochemical industries. Looking ahead over the next few years, heavy capital spending is expected in the US oil and gas industry to cover energy requirements. For this purpose, refinery capacity must be extended by 35 percent between now and 2030. At the same time, calculations indicate that demand for gas will rise by 20 percent by 2020. As many of the existing facilities must be extended or replaced, demand for industrial services will rise.

Key region in the process industry
Tepsco’s range of industrial services entail surface treatment, piping including fabrication, mechanics, electrics, process instrumentation, process control as well as fire protection and noise control. Tepsco’s core market is the greater Houston region, which attracts almost 50 % of extension conversion and maintenance spending in the US process industry. The market addressed by BIS AG, thus, has a total annual volume of around USD 75 billion. As BIS AG’s key European customers also have significant operations in the greater Houston region, the acquisition of Tepsco will also generate additional growth potential in this respect.

Following the acquisition of Scotland-based Salamis Group Ltd. in mid 2006, BIS AG has also had US operations. Around 250 offshore specialists are employed by BIS Salamis Inc. at the main facility in Lafayette, Luisiana, from which they provide renowned customers in the petrochemical industry with surface protection and scaffolding services. In January 2008, BIS AG’s US presence was further strengthened with the acquisition of two service companies with a total of more than 2,000 specialists from Fru-Con Constructruction Corp., a subsidiary of Bilfinger Berger AG. BIS Frucon Industrial Services Inc. has around 1,800 employees based at more than 40 different locations primarily in the Mid and Eastern United States. The industrial services provided primarily entail turnaround management, mechanics, electrical engineering and piping. With roughly 280 specialists, BIS Frucon Engineering Inc. provides engineering and project management services for the planning and construction of industrial facilities. Both companies are headquartered in St. Louis, Missouri.

Following the integration of these two service companies and the acquisition of Tepsco L.P., BIS AG’s US headcount has risen to over 3,400. The Divisions were restructured in January 2008, as a result of which the new North America Division was established under the management of Hans Petter Hansen. Says Hansen: “With the acquisition of Tepsco and in light of the potential for future growth, BIS AG’s North American activities now constitute the Group’s fourth business mainstay in volume terms. The favourable response from customers and management at Tepsco confirms our strong reputation as an internationally renowned industrial services provider.”            
 

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