Downer buys Hawkins for NZ expansion

Downer EDI Limited (ASX: Dow), non-residential construction firm, announced on Wednesday that it has acquired Hawkins, a New Zealand (NZ) company from the McConnell Family. Downer said the acquisition will complement its engineering, construction and maintenance capabilities as well as allow expansion in the NZ market.

“Hawkins is a New Zealand industry leader in construction and infrastructure and this acquisition will complement our existing Engineering, Construction and Maintenance (EC&M) capabilities while also providing a platform for growth,” Grant Fenn, chief executive of Downer, said in a press statement released at the Australian Stock Exchange.

Hawkins is involved in motorway and hotel projects in Auckland. It is also currently building Wellington Airport's new control tower and Christchurch's town hall. Downer said that Hawkins will still operate under its current brand in NZ.

“Hawkins was founded in New Zealand 70 years ago and its highly skilled management team has built a strong reputation for delivering quality projects for its customers in both the public and private sectors,” Fenn said. He added that the acquisition would be funded through existing debt facilities and be earnings accretive in its first year.

The transaction is expected to be completed by March 31. Both companies, however, did not unveil the amount of this acquisition deal.

NZ non-residential construction market

Fenn said that Downer’s estimated investment will go as high as NZ$50 billion (AU$45.8 billion) to non-residential construction in NZ over the next five years. Downer has an established presence in NZ for over 100 years, offering services to range of markets including transport, telecommunications and water.

According to Statistics New Zealand, the demand for farm buildings in the different regions was high in 2016. This was followed by factories, education and public transport buildings.

The construction industry is projected to grow in NZ as it drives employment, especially in Auckland. Construction allowed the three-quarters of all employment growth from Auckland. The strongest employment growth is expected in construction and related industries, with hospitality and tourism, wholesale and retail trade, and business services also growing.

Downer’s EC&M business aims at assisting customers throughout the life of a project. These include the initial feasibility to designs of the construction, commissioning, operation and on-going asset management and decommissioning.

Downer reported a revenue of $3.6 billion and a net profit of $78 million in the six months ended December. Aside from its operations in NZ, Downer also operates in Asia-Pacific region, South America and Southern Africa. The group is also listed on the New Zealand stock exchange (NZX). Downer’s share price ended at $7.21 at the ASX on Tuesday.