Australian infrastructure and mining firm Downer EDI spent A$55.4 million (NZ$60.5m) snapping up local construction firm Hawkins which was in need of capital at the time of the purchase.
The sale price, which was withheld at the time of the deal in March, emerged in Downer's annual report released today, showing the Sydney-based company paid A$52.6m, with the gross consideration including A$2.8m cash balances acquired. At the time of acquisition, Hawkins had negative working capital leading to a negative net asset value of A$16.3m, resulting in Downer recognising A$71.7m of goodwill in the deal.
The acquisition brings "significant technical capability," said chief executive Grant Fenn in a statement. The move let Downer increase its presence in the growing market for infrastructure and building in New Zealand, making it the country's No. 2 'vertical' construction company after Fletcher Building. At the time of the purchase, Fenn said an estimated $50b will be invested in non-residential construction in New Zealand over the next five years.
Downer didn't break out Hawkins' contribution to the group, saying the newly-acquired business helped lift earnings in its engineering, construction and maintenance division, where revenue was up 6.2 per cent to A$2b in the year to June 30. The unit's earnings before interest and tax rose 8.5 per cent to $52.3m, partly due to contributions from the Hawkins acquisition and new contracts in New Zealand, it said.
Within New Zealand and the Pacific, its total revenue was at A$1.5b versus A$1.3b in the prior year. Downer's total revenue - with the bulk being generated in Australia - was A$7.3b versus A$6.9b in the prior period.
Downer reported a net profit of A$181.5m and said it is expecting a net profit of around A$190m in the year through June 2018, excluding any earnings, costs or synergies related to its acquisition of cleaning and catering firm Spotless Group.
The company said its A$1.26b takeover bid for Spotless is now closed and it holds 87.8 per cent of Spotless shares on issue, just short of the 90 per cent required for a compulsory acquisition.
