Downer agrees to acquire construction firm Hawkins from McConnell family
Australia-based infrastructure and mining firmDowner EDI has agreed to acquire Hawkins from the McConnell family, in a further sign of consolidation in the construction industry.
No price was given for the acquisition, which will be debt funded, Downer says. The deal would add to earnings in its first year, Downer chief executive Grant Fenn says.
Hawkins was founded about 70 years ago and has contracts including SH16 Lincoln-to-Westgate upgrade, the construction of Auckland's Park Hyatt Hotel, the Pier B extension at Auckland International Airport, Wellington International Airport's Rongotai control tower, Wellington City Council's Arlington housing project, the Christchurch Town Hall, and the Avon River Precinct in Christchurch.
Mr Fenn says the acquisition will allow Downer to benefit from ongoing construction activity in New Zealand. "It is estimated that more than $50 billion will be invested in non-residential construction in New Zealand over the next five years," he says.
The acquisition follows Fletcher Building's acquisition of rival construction company Higgins Group Holdings last year for $303 million. That deal was approved by the Commerce Commission after Fletcher dropped the Horokiwi Quarries business from its application to reduce its dominance in the aggregates market.
Horokiwi Quarries is a 50-50 joint venture between Higgins and privately held construction firm Fulton Hogan. In January, Downer EDI said its New Zealand boss Cos Broyn was leaving to take over the reins at Fulton Hogan although he faces a nine-month restraint period before he can become Fulton Hogan chief executive.
Last month, Downer EDI posted an 8.5% gain in first-half profit to $A78 million and raised its full-year guidance to $A175 million. Mr Fenn said at the time the company was in a period of "very strong operational and financial performance."
John McConnell told the NZ Herald in 2015 the family was forced to sell its interest in construction firm McConnell Dowell in the wake of the 1987 sharemarket crash and it subsequently started its own business, McConnell Group. In 1996 the McConnell family had invested in 50% of the Hawkins business and by 2002 had bought a 100% percent shareholding, according to the Hawkins website.