Heitkamp


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Background


Many of the potable water pipelines (for drinking water) in the U.S. were laid more than 100 years ago. Over time, these pipelines have started to build up rust, scaling and tuberculation creating discoloration and reducing flow rates, leading to the end of their useful lives.

Over the last 30 years, Heitkamp Inc. ("Heitkamp") has become one of the leading, and most respected companies, which clean and reline existing water pipelines with cement and/or epoxy. Heitkamp's approach restores the pipelines to nearly its original diameter, and greatly improves water quality and flow. Compared to open trenching and replacing old pipeline, Heitkamp's trenchless rehabilitation is significantly more economical and less disruptive.

Heitkamp grew consistently and profitably, supported by a very experienced and loyal workforce. The Company operated as an independently managed, financially successful subsidiary of Frontier Kemper Constructors, Inc. ("FKCI"), a leader in heavy civil construction and mine development for mining industry. Following an acquisition of Frontier Kemper's parent company, Deilmann Haniel Mining and Tunneling GmbH ("DHI"), by ATON GmbH ("Aton") - a Germany based investment and industrial holding company - it was determined that Heitkamp might profit from a more synergistic parent organization.

Strategy



Working closely with management at Heitkamp and FKCI in the United States as well as DHI and Aton in Germany, Conexus initiated a systematic, world-wide buyer search designed to identify companies which would most strongly benefit from Heitkamp's loyal workforce and leading expertise in the pipeline rehabilitation market within the United States. On a very confidential basis (and unknown to Heitkamp's direct competitors in the United States), Conexus identified and contacted a select group of synergistic buyers from all over the world, including major U.S. firms interested in entering the water pipeline rehabilitation market. Conexus managed the process very carefully to maintain confidentiality at all stages of the transaction, including final due diligence and closing.


Outcome


On December 10th, 2007, Heitkamp was acquired by Sekisui Chemicals Co., Ltd ("Sekisui") based in Tokyo and Osaka, Japan. Sekisui is a publicly traded, worldwide operating (over 200 subsidiaries in 20 countries) chemical company providing high performance products in the fields of plastics, water environment solutions and factory produced housing. In 2007, Sekisui had worldwide sales of close to 1 trillion yen (approximately USD 10 billion). Among many other leading products, Sekisui developed a proprietary sewer pipeline rehabilitation system ("SPR method") which allowed the rehabilitation of major sewer pipelines by building a new pipe -- through spiral winding of a rigid PVC profile belt with interlocking grooves -- into an existing structure without interrupting sewer flow. While Sekisui achieved market dominance with its SPR system in Japan, it had almost no penetration into the United States market. Heitkamp's stellar reputation, experienced management team, broad-based / loyal workforce, as well as its established base of operations in the Northeast and Mid-Atlantic provided Sekisui with an ideal platform for launching its SPR system in the U.S. At the same time, Sekisui proved to be an ideal new corporate parent for Heitkamp given Sekisui's long-term strategy and strong interest in preserving the Heitkamp brand, workforce, and organization - something that was very important to the seller.





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