Sumitomo Forestry will acquire 51% of the equity shares of Metricon Group, Australia’s largest detached home builder, through its wholly owned subsidiary Sumitomo Forestry Australia. Metricon will become a consolidated subsidiary of Sumitomo Forestry. Source: Timberbiz
The acquisition is expected to be complete by the end of the year and it has already passed through Australia’s competition requirements.
Sumitomo Forestry will make Metricon, which sells mainly detached homes in the Australian States of Victoria, Queensland, New South Wales and South Australia, a consolidated subsidiary, with a view to expanding the company’s housing business in Australia and to build a stable earnings portfolio in its overseas housing business.
Metricon does not expect any major changes to its operations in Australia, the company has around 2500 employees.
Metricon CEO, Brad Duggan, says that after months of discussions and negotiations, whilst this strategic partnership marks the beginning of a new chapter, at Metricon it will be business as usual.
“Metricon has worked hard over the past 24 months to return the group to its position of strength, and we are ecstatic that this work has resulted in the establishment of such an important partnership with Sumitomo Forestry. This partnership enhances Metricon’s readiness to respond to the opportunities in the Australian housing market,” Mr Duggan said.
“Both Metricon and Sumitomo Forestry see the great advantages that can be harnessed from working together. The Australian housing industry, more than ever, needs strong participants to solve the issues it currently faces, and this partnership will further build Metricon’s market leading position.
“In Sumitomo Forestry, Metricon has found an exceptional partner that aligns strongly on the importance of legacy and commitment to excellence while also complementing the existing ownership group and management team. Together we are confident we will build a well-considered, long-term strategic future for Metricon, our team and customers.
“With the sale and purchase agreement signed we expect to announce the successfully completed transaction in the coming weeks.”
Metricon has established a dominant brand presence in Australia as a top builder, boasting a broad product lineup ranging from standard products for first-time home buyers to luxury brands, and in recent years has been expanding its business domain to include more affordable detached housing products, town homes, and public housing construction.
Sumitomo Forestry entered the Australian detached homes business in 2008, after which it acquired Henley Properties Group in 2009, before going on to acquire Wisdom Properties Group (New South Wales) and Scott Park Group (Western Australia).
If this acquisition goes ahead around 12% of Australian homes will be built by foreign owned companies.
With the acquisition of Metricon as a consolidated subsidiary, the number of new housing starts by the Sumitomo Forestry Group in Australia will be more than 7,000 units per year, making Sumitomo Forestry Group the number one builder in Australia. Australia’s need for housing with an expected 1.2 million new homes in the next five years is an attractive proposition.
Yasuhiro Odagane, Managing Director of Sumitomo Forestry Australia, says this acquisition is key to helping Sumitomo Forestry achieve its goal of addressing the long-standing housing shortage in Australia.
“This acquisition enables our group to expand the business areas in each state, establishing Sumitomo Forestry as the number one builder in Australia and, most importantly, allowing us to make a substantial contribution to the provision of social infrastructure,” he said.
