‘Business as usual’: What the Metricon sale means for Aussies building homes
Days after Metricon was announced as Australia’s biggest home builder for the ninth consecutive year, the company has confirmed that a Japanese firm has bought a 51% stake in the business. Does this change anything for Aussies building homes?
Sumitomo Forestry Group is now the majority shareholder in Metricon Homes in a $115m deal, confirmed today, that values Metricon at about $230m.
Once all conditions are met, the agreement opens a pathway for Sumitomo Forestry Australia to take full control of the company, with an earn-out over five years to confirm pricing.
Metricon CEO, Brad Duggan, believes the move will give Australians more confidence to build a home, and is ‘ecstatic’ over the partnership, seeing it as an important step forward for both the company’s legacy and the construction of more homes in Australia amid tough conditions.
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Metricon CEO, Brad Duggan, and CFO, Jon Robson, confirm a 51% stake has been sold to Japan’s Sumitomo Forestry Group in a move to anchor its market-leading position into the future.
“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.
“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.”
Who bought Metricon?
Established in 1691, Sumitomo Forestry Group is engaged in a diverse range of business activities including the Environment and Resources Business, Timber and Building Materials Business, and Global Construction and Real Estate Business. The juggernaut employs almost 25,000 people.
Known for its global expertise in real estate and global wood-related industries, Sumitomo Forestry has a positive track record of successful investments in the Australian home building industry.
The company entered Australia’s housing industry in 2008 and has been expanding its business in major cities ever since, with Henley Homes, Edgewater Homes, Scott Park and Wisdom already on its bill.
As part of this transaction Metricon will become a consolidated subsidiary of Sumitomo Forestry which is listed on the Tokyo Stock Exchange.
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A recent artist’s impression of one of the display homes available to choose from for a new housing development in Moggill by DVLP Projects and Metricon
The partnership supports the Sumitomo group achieving its goals of promoting the use of timber products in construction and contribute to global decarbonisation efforts, while also marking a significant investment in the future positioning of Metricon.
“This organisation’s purpose is so deeply rooted in timber, it’s incredible. They really believe in the value that timber can create for a decarbonisation effect on the environment,” Mr Duggan told realestate.com.au
What does the Metricon sale mean for people already building?
Under the terms of the deal, Metricon will retain its unique operating model, ensuring that there will be minimal change to its structure, service, market offerings or brand.
Business as usual
“There’ll be no change for the brand or operations. Sumitomo believes the best people to run this business is the existing Metricon team,” Mr Duggan said.
“It will be business as usual at our display homes, building sites, our Studio M selection centres, and offices. Our customers can continue to expect the same great level of service and design, with the likelihood of even greater customer outcomes because of this partnership in both the short and long term.”
Metricon believe the strategic partnership with Sumitomo Forestry strengthens their position in the industry and presents an extraordinary opportunity for future growth.
Boost to buyer confidence
It’s also set to increase buyer confidence, with Metricon believing this strength can help abate common anxieties over risks associated with a build journey, such as a builder folding.
“If there was a concern out there about the build journey, this transaction should give the customer confidence that there’s no reason to be concerned, and in time, with the backing of Sumitomo Forestry, we’ll find new ways to reduce our costs and build faster for our customers,” Mr Duggan said.
“It’s hard for customers right now to take that leap to build a home. Whether it’s confidence in their own financial capacity because of cost of living or interest rates, or also confidence in the build journey itself.
“And this partnership is a good example where customers can say, ‘You know, what? I’ve got my finances sorted. I can now be confident that I can build home’,” he said.