Civil contracting company Fulton Hogan Ltd has shareholder approval to buy back Shell's 37 percent shareholding in the company and is also buying 50 percent of an Australian asphalt manufacturer from Shell Australia.
Fulton Hogan is buying half of Pioneer Road Services Pty. Fulton Hogan bought a half share of Melbourne-based Pioneer Road Services in May this year from Hanson Australia. The purchase of the rest of the company from Shell Australia by the end of the year and will be funded by debt.
Fulton Hogan has operated in Australia since 1980 and its business there now turns over $A800 million. Pioneer Road Services has revenue of about $A400m a year and has about 800 staff.
The size of the Australian acquisition was the reason why the buyback of Fulton Hogan shares from Shell was over a period of time, Fulton Hogan managing director Dave Faulkner said.
"We are in an unusual position in that we have come from a position of pretty low debt unlike others at the moment," he said.
The low debt resulted from selling EnviroWaste Services in 2006. Fulton Hogan is a privately owned and highly regarded company that has recently commemorated 75 years in business. The company moved to Christchurch in 2001 after 68 years in Dunedin.
Mr Faulkner said Fulton Hogan was still a South Island company and it was intended to be so for a long time.
The buyback of shares will start on December 30 this year and take four and a half years. Fulton Hogan is buying the shares back and cancelling them as they are purchased.
The Independent newspaper has reported that Shell will get about $472m for its 37 percent stake in six instalments.
"Fulton Hogan is a well-run, New Zealand-owned business that we have enjoyed a very successful business partnership with for nearly 30 years," said Rob Jager of Shell New Zealand.
"Fulton Hogan indicated to us a strong desire to preserve the fabric of the company, and keep the ownership within the founding family shareholders, employees and business partners without introducing a new shareholder at this time. We have worked constructively with the company to find a solution meeting these requirements," he said.
Shell is continuing exclusive discussions with the consortium of Infratil Ltd and New Zealand Superannuation for the potential sale of the New Zealand downstream business.
Shell has decided to simplify its downstream portfolio and concentrate on larger, integrated assets in growth markets.
