Housing slump forces construction giant BGC to shelve $2.5 billion sale plans after family feud
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A prolonged slump in Western Australia’s property market has forced construction giant BGC to shelve the sale of its building and construction business — which came about after a family feud following the death of patriarch Len Buckeridge — for the “foreseeable future”.
Key points:
- Len Buckeridge died leaving his family running a $2.5 billion building empire
- The family announced they would sell it after a falling out
- That decision is now on hold due to WA’s protracted housing slump
Perth is more than four years into a housing downturn that is yet to bottom out after median house prices peaked at $585,000 in November 2014, according to Landgate figures.
The state’s property market became a casualty of a slump in population growth, triggered when a swathe of construction projects kicked off by the mining boom were completed.
In the 2017-18 financial year the number of homes being built in WA hit a 30-year low, falling 9 per cent on the previous year to 18,124, according to a report from the Housing Industry Forecasting Group, which collects data from both government and industry sources.
The report also found building approvals fell 9.4 per cent in the year to 18,443, down from 20,367 in 2016-17.
Almost 5 per cent of building approvals in WA are abandoned and do not progress to construction.
Sale plans prompted by family fight
The heirs to construction tycoon Len Buckeridge’s fortune announced last May they would sell the $2.5 billion BGC business empire he founded more than 50 years ago, following a protracted legal dispute over the distribution of his wealth among 15 family members.
There was a long-running family dispute about how his wealth should be being distributed, with some family members objecting to being left shares in the company rather than cash.
BGC chairman Neil Hamilton told a teleconference on Thursday the sale of the company’s building and construction arm would be put on hold until conditions improved.
“Having considered the current challenging trading environment, including record low housing starts in Western Australia, we have determined the market conditions are not conducive to any near term plan to realise the value of these businesses,” he said.
“Any divestment plan for these businesses has therefore been deferred for the foreseeable future.”
Mr Hamilton said the company would instead look at options for growth to put the business in a better position for sale.
The company employs around 4,300 people nationwide across construction, mining, contracting and manufacturing businesses.
Mr Buckeridge built the vast nationwide group from scratch in the 1960s and it remains one of Australia’s biggest privately-owned companies.
Other businesses up for sale
The company is also selling its $1.7 billion national mining and civil maintenance business, which employs about 2,000 people across most states and territories.
Corporate advisor Macquarie Capital will consider a number of options including a possible sale, divestment of parts of the business or an overhaul of the way the business was structured.
“While this review is ongoing it will be business as usual for our customers and our staff, and the focus of BGC Contracting will continue to be on delivering excellent services for our customers,” Mr Hamilton said.
“Our workforce remains our most valuable asset and we are confident that all options being explored are strengthened by the value that our people bring to our customers.”
The board was also considering selling “non-core” property assets worth “hundreds of millions of dollars”, including CBD and suburban office buildings and apartments.
Three of the building tycoon’s children — Sam Buckeridge, Julian Ambrose and Andrew Buckeridge — took up running of the business following his death, but have announced they would all step down from day-to-day executive responsibilities, including the appointment of a chief executive, to make way for an independent executive.
Chief financial officer Alan Tate has become acting CEO while the group made plans to fill the position.
“Now is the right time the company appoint a CEO and they (executive directors) see that as a step in fulfilling the family members decision to sell the group, a logical step in that path,” Sam Buckeridge said.
“The terms of the family’s agreement are broad to not impinge upon the directors discretion in how the directors go about selling the group.”
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