An Australian-headquartered business is buying New Zealand's second-biggest builder, ending a long association with the wealthy Auckland-based McConnell family.
Downer EDI, the Australian-headquartered infrastructure and mining firm with extensive business interests in New Zealand, said in a statement to the NZX that it had signed an agreement to buy Hawkins from the McConnells.
Hawkins, headquartered on Stanley St in Parnell, has operations in the Asia Pacific region, Auckland, Hamilton, Wellington and Christchurch.
David McConnell, managing director of McConnell Group in Auckland and a Hawkins director, said the sale would mean an end to his family's long association with the building and infrastructure business which he said now had more growth opportunities.
"It's grown 10-fold since we bought it fully in 2002, from about $90 million of gross annual revenue to about $900m. The McConnell family has owned 100 per cent of Hawkins since 2002 but the relationship with Hawkins extends back to 1982 when McConnell Dowell acquired Hawkins in a reverse takeover," McConnell said.
One building chief estimated Hawkins would be sold for about $50m but the price is being kept confidential by both parties. No Overseas Investment Office consent is needed. McConnell said advice received was that the purchase was not subject to approval.
OIO consent is needed for deals of $100m-plus and if land classified as sensitive is involved in a purchase by a foreign entity.
Asked if he was sad about the family association ending, McConnell said: "Downer is now a New Zealand business, listed on the ASX but it has strong New Zealand roots and it has significant activities here. Hawkins will have a stronger capital base to work off, a better capitalised parent in Downer and that will allow the business to expand."
McConnell said while Downer had significant New Zealand infrastructure activities, it did not have big commercial building activities, so purchasing Hawkins could change that.
Hawkins is New Zealand's second-largest builder with turnover or gross annual revenue of about $850m, McConnell said.
"Building activity would be about $650m to $750m, or of that order," McConnell said.
Fletcher Building has a forward order book of more than $2 billion of construction work.
Grant Fenn, Downer chief executive, said in the NZX notice that Hawkins was an excellent strategic fit for Downer's New Zealand business.
"Downer has a long and proud history in New Zealand that can be traced back more than a century," Fenn said. "Today we are a leading provider of services to our customers in a range of markets including transport, telecommunications and water.
"Hawkins is a New Zealand industry leader in construction and infrastructure and this acquisition will complement our existing engineering, construction and maintenance capabilities while also providing a platform for growth. It is estimated that over $50bn will be invested in non-residential construction in New Zealand over the next five years."
Hawkins would continue to operate under its current brand.
Hawkins was established in Hamilton in 1946 by Fred Hawkins and has grown in seven decades to become a leader in infrastructure and building.
Hawkins employs about 700 people and specialises in the design and construction of buildings and infrastructure here and also the Asia Pacific, Downer said.
Hawkins projects include:
• State Highway 16 Lincoln to Westgate upgrade
• Construction of Auckland's $200m Park Hyatt Hotel on the waterfront
• Pier B Extension at Auckland International Airport
• Wellington Airport's Rongotai control tower
• Wellington City Council's Arlington Housing Project
• Christchurch Town Hall
• Avon River Precinct, Christchurch.