Downer agrees to acquire Hawkins

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Downer EDI, the Australian-based infrastructure and mining firm, 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 would be debt funded, Downer said in a statement to the NZX. The deal would add to earnings in its first year, Downer chief executive Grant Fenn said.

Hawkins was founded about 70 years ago and currently 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.

Fenn said the acquisition would allow Downer to benefit from ongoing construction activity in New Zealand. "It is estimated that over $50 billion will be invested in non-residential construction in New Zealand over the next five years," he said.

The acquisition would follow 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 per cent gain in first-half profit to A$78 million (NZ$85m) and raised its full-year guidance to A$175m. Fenn said at the time that the company was in a period of "very strong operational and financial performance."

John McConnell told the NZ Herald in 2015 that the family was forced to sell its interest in construction firm McConnell Dowell in the wake of the 1987 sharemarket crash and the family subsequently started its own business, McConnell Group. In 1996 the McConnell family invested in 50 percent of the Hawkins business and by 2002 had purchased 100 percent shareholding, according to the Hawkins website.