AusRAIL, Market Sectors

Leighton sells John Holland to China

<span class="" id="parent-fieldname-description"> Hong Kong-listed China Communications Construction will buy engineering, contracting and services provider John Holland from Leighton Holdings. </span> <p>Leighton, which bought 70% of John Holland in 2000 and most of the remaining stake in the company in 2004, will sell the firm to China Communications Construction in a $1.15bn deal, expected to be completed in the first quarter of 2015.<br /><br />John Holland will become part of CCCC International (CCCI), a wholly-owned subsidiary of China Communications Construction, which is largely owned by China’s state-owned assets commission.<br /><br />Glenn Palin, managing director of John Holland, said he was excited about the opportunities the deal presented for the Melbourne-based firm.<br /><br />“From our point of view, John Holland and CCCI are extremely complementary,” Palin said.<br /><br />“With the strength and capability of CCCI backing us, John Holland is set for a bright future in the Australian infrastructure market. This is the next step in our journey as one of Australia’s leading engineering contractors.<br /><br />Major projects in the books for John Holland at the moment include tunnelling and stations for Sydney’s North West Rail Link passenger line, construction of a new Children’s Hospital for Perth, and the development of part of Victoria’s new Regional Rail Link.<br /><br />John Holland also performs work for the mining, mineral processing, resource transport and port sectors, as well as general construction work across several other industries.<br /><br />CCCI president Lu Jianzhong said the acquisition was a momentous step for the Chinese company.<br /><br />“We believe there are very significant growth opportunities in the Australian market, and clearly in the proposed acquisition of John Holland, we are recognising the strong leadership and solid performance of the business,” Lu said.<br /><br />“Ownership of John Holland is the optimal way for China Communications Construction to participate in this dynamic market as part of our aim to be a global transportation infrastructure business.”<br /><br />He added: “We see JHG as a strong independent competitor in the Australian market.”<br /><br />Lu said he expects there will be opportunities to export John Holland’s skills in road, rail, tunnelling and water infrastructure.<br /><br />The sale of John Holland ends a six-month bidding process. China Communications Construction was among the names rumoured to be in the frame from fairly early in that process, and was joined throughout by talk of interest from US firm KBR, South Korea’s Samsung C&ampT, France’s Bouygues, and Australian giant Lend Lease, among several others.<br /><br />Leighton’s new owners, Spanish firm ACS, opted to sell John Holland in June as a way of paying off debt. John Holland was considered the best candidate for sale among Leighton’s key subsidiaries, which also include Leighton Contractors and Thiess.<br /><br />Marcelino Fernndez Verdes, Leighton’s executive chairman and chief executive officer, said the sale of John Holland demonstrates the progress Leighton’s new owners have made in strengthening the company’s balance sheet, and improving its operating model.<br /><br />“Following a comprehensive and extensive global sale process we have achieved a value for John Holland which reflects its position as one of the country’s leading engineering and construction companies,” he said.<br /><br />“The divestment of John Holland supports our focus on further reducing gearing and strengthening our balance sheet so that we can be sustainably competitive.”</p>