Flatiron, Dragados merge to form US-based infrastructure giant

Dive Brief:

• Two European construction powerhouses announced Tuesday they are merging portions of their North American operations to form a U.S.-based infrastructure juggernaut.
• Germany-based Hochtief and Madrid-based ACS Group announced the combination of Broomfield, Colorado-based Flatiron and Spain-based Dragados’ operations in North America to create what would be the second-largest domestic heavy contractor in the U.S., behind only Kiewit. Hochtief and ACS own Flatiron and Dragados, respectively.
• Peter Davoren, CEO of New York-based Turner Construction, which announced the acquisition of Ireland-based Dornan Engineering last week, will serve as chairman of the combined company. Davoren will remain in his role at Turner, which is owned by Hochtief. Flatiron CEO Javier Sevilla will be CEO of the new firm, named Flatiron Dragados. 

Dive Insight:

The move forges even closer ties between the European construction market and U.S. infrastructure builds at a time when American projects have been booming despite a higher interest rate environment. In contrast, European construction activity has languished as the economies of both the United Kingdom and Germany have struggled. 

Ties between the respective firms in the deal have long been interwoven. For example, ACS is the majority owner of Hochtief, which in addition to Flatiron also owns Turner.  ACS and Hochtief are publicly traded companies on European exchanges. 

Under the terms of the deal, ACS will hold 61.8% of Flatiron Dragados, with Hochtief controlling the remaining 38.2%. The combined business boasts a backlog of $17.2 billion — 40% of which are collaborative contracts — and had cumulative revenue of $6.1 billion in 2023, according to a news release announcing the deal. 

This would make it the 21st largest commercial construction firm in the U.S. by revenue, based on the latest ENR 400 list, and the second largest domestic heavy contractor. Kiewit topped that category in 2023 with revenue of $6.01 billion. 

Hochtief and ACS did not say whether any cash was involved in the deal. While the combination has been approved by the boards of both Hochtief and ACS, the deal will be finalized later this year, according to Chris McFadden, spokesperson for Turner. The location of the new company’s headquarters wasn’t disclosed. 

The combined entity, which will encompass Flatiron as well as Dragados USA and Dragados Canada, according to a video outlining the deal, will have operations in 24 U.S. states and eight Canadian provinces. The video characterized the new firm as “North America’s benchmark civil engineering company.”

“Bringing together Flatiron and Dragados creates a strong platform for organic growth in North

America,” said Juan Santamaría, Hochtief’s CEO, in the release. “Flatiron and Dragados North America employees have a long history of working together.”

For example, the companies teamed up on the $1.2 billion Harbor Bridge project in Corpus Christi, Texas. While a dispute with Texas DOT led to a work stoppage in 2022, that claim was resolved and the project is currently slated for completion in 2025, according to the project website. 

Hochtief said the deal will create synergies and economies of scale, with a consistent approach to operations, including tender processes, procurement strategies and risk management.