Do construction company mergers increase their competitiveness?

04 March 2015

Why do construction companies consider mergers? We interviewed Margot Kuhn, Senior Industry Analyst at Frost & Sullivan on why construction companies may consider merging and what the pros and cons of potential mergers would be.

Companies may consider merging if there are delays in government spending, as well as other emerging issues causing delays in state owned projects.

“We have seen companies considering merging due to under performing which is the state of the construction market at the moment.
If growth rates are low, companies need to steal market share from each other, and they can only do this by growing at a steady pace”, Kuhn says.

A potential merger within the construction market would be to increase competitiveness, so the positives of these moves would be things such as increased footprint in the African market, a stronger balance sheet to weather the storm, gaining skills to be able to deliver on larger projects.

On the flip side, there could be a negative impact on the market as a whole because of having competitive factor which could negatively impact the market.

Any mergers of course, would have to be approved by the Competition Commission.
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[Do construction company mergers increase their competitiveness?]


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