Kamaʻāina Firms to Join Forces: A&B to Acquire Grace Pacific
By Wendy Osher
Alexander & Baldwin, Inc. has entered into an agreement to acquire the privately held Grace Pacific Corporation for an estimated $235 million, according to a joint announcement from both companies yesterday.
The purchase is subject to adjustment at closing and includes a combination of 85% A&B common stock and 15% cash, company officials said.
Under the deal, A&B would also be assuming a projected net debt estimated at $42 million, the announcement stated.
According to company officials, Alexander & Baldwin, Inc. is the state’s fourth largest landowner, with more than 87,000 acres in its Hawaiʻi portfolio. The company has interests in real estate development, commercial real estate and agriculture.
Grace Pacific Corp. is one of the state’s largest locally owned construction companies with an estimated 550 employees and 135 shareholders, according to the announcement. The Kapolei-based company is also considered the largest asphalt paving contractor in the state, officials said.
“The addition of Grace to the company will extend our capabilities to encompass infrastructure development and replacement work, for which we see a steady and growing need in Hawaiʻi,” said said Stanley M. Kuriyama, A&B chairman and chief executive officer in a statement.
“Grace’s strong, difficult-to-replicate business model, diverse payer base and steady and growing cash flows will increase our local market presence, provide A&B with additional financial capacity to execute on new real estate opportunities in Hawaiʻi, and allow us to initiate a modest quarterly cash dividend,” said Kuriyama.
Executives with Grace Pacific Corp. also commented on the pending sale.
In the announcement, David C. Hulihee, chairman and chief executive officer of Grace Pacific Corporation issued a statement saying, “Given our strong financial performance as an independent, employee-owned entity, we were not actively looking to sell Grace. However, by joining forces with A&B, we will be better able to leverage our combined market knowledge, expertise, asset base and financial strength to capitalize on growth opportunities presented by the improving performance of Hawaiʻi’s economy.”
According to the joint announcement, it was noted that A&B Director Walter Dods already owns about 12% of Grace; while fellow A&B director, Jeff Watanabe, holds a 1% interest in Grace.
Among the benefits anticipated by A&B in the acquisition is Grace’s expertise in quarry management. Company officials say this will help A&B realize greater value over time for quarries it already owns on Maui and Kauaʻi.
***Supporting information courtesy Alexander & Baldwin.