On taking control of the conglomerate earlier this year Spain’s Hochtief indicated it wanted to streamline Leighton’s businesses and reduce duplication across its mining and engineering and construction interests.
John Holland has been involved in major oil and gas projects including Inpex’s Ichthys onshore LNG project in Darwin, Chevron’s Wheatstone project and Australia Pacific LNG in Queensland.
China’s state-owned China Communications Construction Company, which is the fourth largest construction company in the world by revenue, will pay $1.15 billion for John Holland, subject to certain adjustments.
Verdes said in June that the sale of John Holland was on the table, and it has taken him less than six months to find a buyer.
“The divestment of John Holland demonstrates the progress we have made with our strategic review initiatives over the past six months to strengthen the balance sheet, streamline the operating model and improve project delivery,” he said.
“Following a comprehensive and extensive global sale process we have achieved a value for John Holland which reflects its position as one of the country’s leading engineering and construction companies.
“The divestment of John Holland supports our focus on further reducing gearing and strengthening our balance sheet so that we can be sustainably competitive. Proceeds will also be used to finance future growth, particularly in PPPs [public private partnerships].”
The indicative impact of the sale on Leighton will be a reduction of annualised revenue of $3.7 billion and work of $5.4 billion, the transfer of 4100 employees and a reduction in gearing of about 10%.
“The existing John Holland management will work closely with CCCI to ensure a smooth transition so that the business continues to safely and efficiently provide services to its clients,” Verdes said.
CCCI president Lu Jianzhong said there were "significant growth opportunities" in the Australian market.
"From our perspective, ownership of John Holland is the optimal way for CCCC to participate in this dynamic market as part of our aim to be a global transportation infrastructure business," he said.
The CCCI sale follows on the heels of a new free trade agreement between Australia and China that allows for Chinese workers to be brought into Australia to work on domestic projects.
CCCI has a market capitalisation of $23.5 billion and primarily specialises in large transport projects, of which there are many in the planning stages in Australia.
John Holland was founded in 1949 by Sir John Holland, and has been a major construction company in Australia over the past 65 years.
It is one of Australia’s largest engineering, contracting and services providers to the infrastructure, energy and resources and transport services sectors, operating across Australia and in New Zealand, South East Asia and the Middle East.
The sale is subject to customary approvals including by the Foreign Investment Review Board.