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Irish on-line construction collaboration firm Buildonline.com is merging its German operation with its main competitor in Germany, MyBau.de.
Buildonline.com will receive EUR4 million in cash from the deal and will receive a further EUR8 million in revenues over the next two years from Mybau.de's customers. In exchange it will give a minority equity stake to MyBau.de's two main shareholders, construction firms Bilfinger Berger and Strabag. Additionally, Bilfinger Berger and Strabag will rollout Buildonline.com's products out across their organisations.
The deal is seen as a return to core competency by Bilfinger Berger and Strabag, while allowing them to retain a stake in the high-tech sector of the construction industry.
"It has been said that this is an example of two old-economy companies getting out of the hi-tech sector," said Mark Suster, chief executive officer of BuildOnline.com speaking to ElectricNews.Net. "But you don't exit a sector by investing cash in a company with which you are forming partnerships across Europe."
At the same time Suster downplayed the influence that the equity stake would give Bilfinger Berger and Strabag respectively. Neither did he believe that other European construction companies would shy away from Buildonline.com, fearful of the influence of these companies, both of whom are counted among the top ten European construction firms.
"Buildonline.com has strong corporate governance, our other investors include Goldman Sachs, Vivendi, Sal Oppenheim, Bank Boston, GRP Partners, ETF and Delta Partners," he said.
The deal will make Buildonline the largest supplier of e-business software and services to Europe's EUR815 billion construction industry.
"Collaboration software is definitely changing the way construction projects are managed," said Dr. Walter Hinder, a board member of Bilfinger Berger. "We have chosen to join forces with BuildOnline due to their track record at implementing their services across large European construction companies. This deal supports our company strategy to accelerate eBusiness across our entire international business."
Collaboration software, such as the type made by Buildonline, allows participants in a construction project to collaborate on-line, reducing construction costs by reducing errors.
Bilfinger Berger is the second largest German construction firm with more than EUR4.5 billion in annual turnover, of which 40 percent is based in Germany. Strabag has annual turnover of EUR5.4 billion, making it the 4th largest construction firm in the German market and the largest construction firm in Austria.
BuildOnline.com was founded in Ireland in 1998. Since then it has raised EUR54 million from seven investors and EUR27 million of these funds were raised between 2001 and 2002. "While B2B exchanges were finding it hard to raise cash based on their business models, Buildonline.com managed to raise a lot of cash because we're not a B2B exchange, we provide collaboration software," said Mark Suster.
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