Fletcher Building has gained clearance from the Commerce Commission to acquire Higgins Group Holdings, the rival construction company, after dropping Horokiwi Quarries from its application to reduce its dominance in the aggregates market.
The Commerce Commission clearance has given Fletcher to acquire Higgins’ road surfacing and road maintenance, civil structure and construction products, including most of its aggregates and bitumen businesses. Higgins will transfer the ready-mix and property businesses to its existing shareholders before the acquisition.
”Higgins and Fletcher Building are key competitors of aggregate products in particular regions,”
”However, we consider that strong competition would continue in these regions from existing competitors and the ability of customers to self-supply.” said Mark Berry, Commission Chair.
Fletcher also amended its application to exclude Horokiwi Quarries, a 50-50 joint venture between Higgins and Fulton Hogan. It operates three quarries in Wellington, after the commission identified the manufacture and supply of aggregates from quarries as its key competition concern in a statement of preliminary issues in February.
Fletcher Building has not stated whether the changes would affect the $315 million price it has agreed to pay for Higgins. Fletcher Building shares also closed at $8.58 after the announcement. Based on the consensus of 11 analysts polled by Reuters, the stock now is rated a ”buy”.