Spain's Acciona doubles Australian business with Geotech acquisition

Originally from the Australian Financial Review

 

Spanish infrastructure group Acciona will become a more formidable competitor on big infrastructure projects after shelling out $197 million to acquire Victorian engineering group Geotech.

The Spanish group’s local employees will double to about 1000 people after buying family-run Geotech, which owns specialist rail design group Coleman Rail as well as mechanical engineering group John Beever and a geotechnical business.

Fernando Fajardo, managing director of Acciona’s Australian and Asia Pacific infrastructure operations, told The Australian Financial Review that Coleman Rail would put the Spanish group in a “strong position” to compete for big rail projects, such as Melbourne’s $11 billion Metro Tunnel and the $12 billion Sydney Metro.

Acciona, which has operated in Australia since 2002, is, with another Spanish group Ferrovial, part of one of the consortiums short-listed to build the nine-kilometre metro rail tunnel in Melbourne, and will use Coleman Rail to help build it if it wins, Mr Fajardo said.

Owning Geotech shows Acciona is “committed to deliver” projects in Australia and gives it the capability to become “a tier one company”, he said.

 

Genuine ‘Australian roots’

Acciona chairman and chief executive José Manuel Entrecanales said the aquisition enabled the Spanish group to become a “leading” contractor in the Asia Pacific with “genuine Australian roots”.

Geotech and Acciona have already work together on projects, including Sydney’s $2.1 billion CBD and South East Light Rail system.

Bringing Geotech into Acciona will also help the Spanish group finish the light rail project, which has suffered cost blow-outs, on time in early 2019, Mr Fajardo said. “Having them in the same company will improve efficiency and will give everyone more confidence that we are going to meet our goals.”

Acciona has started to lay down the tracks for the light rail system, which will run down George Street.

Bede Noonan, son of Geotech founder Gerry Noonan, said there had been “significant interest” in the Australian company from international groups after management began searching for a potential buyer in 2015, and that Geotech had been in talks exclusively with Acciona for about eight months.

Mr Noonan and his brother André, with executive director Darren Loidl, controlled 75 per cent of Geotech. The three men will have a 17.6 per cent stake in a new company, Acciona Geotech Holding, and Acciona will control the remainder.

 

Technical expertise

All other investors, including former Lazard chief executive John Wylie who owned about 18 per cent through his private equity group Tanarra Capital, are selling out.

As well as Geotech’s technical expertise, Acciona was attracted to the Melbourne-based company’s “successful track record of profitable growth” and good management team, Mr Fajardo said.

Mr Noonan will be chief executive of the new company and Acciona’s advisory chairman in Australia Garry Hounsell will be chairman.

Geotech’s current chairman, former Leighton Holdings chief financial officer and deputy chief executive Dieter Adamsas, will be part of the new company’s board.

The deal represents yet another takeover of an Australian construction and engineering group by a Spanish group, after contractors Leighton Holdings, UGL, Broadspectrum and Queensland engineering group Sedgman were acquired by Spanish companies over the past few years.

Acciona’s energy business, which owns three wind farms in Australia, will remain a separate entity and operate as an independent business within the Spanish group.