Friday 8th July 2016
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Fletcher Building has gained Commerce Commission clearance to acquire rival construction company Higgins Group Holdings after dropping Horokiwi Quarries from its application to reduce its dominance in the aggregates market.
The regulator cleared 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 its ready mix concrete and property businesses to its existing shareholders prior to the acquisition.
Fletcher amended its application last week to exclude Horokiwi Quarries, a 50-50 joint venture between Higgins and Fulton Hogan that operates three quarries in the Wellington region, after the commission identified the manufacture and supply of aggregates from quarries as its key competition concern in a statement of preliminary issues released in February.
Fletcher hasn't said whether the changes would affect the $315 million price it has agreed to pay for Higgins.
“Higgins and Fletcher Building are key competitors of aggregate products in particular regions," said commission chair Mark Berry. "However, we consider that strong competition would continue in these regions from existing competitors and the ability of customers to self-supply."
Fletcher shares last traded at $8.70 and have gained 9.6 percent in the past 12 months, lagging behind a 22 percent gain in the S&P/NZX 50 Index. The stock is rated a 'buy' based on the consensus of 11 analysts polled by Reuters.
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