News Beat: Nan Inc. Buys Grace Pacific from Alexander & Baldwin in $57.5M Deal

Nan Inc., Hawai‘i’s largest locally-owned construction company, announced Nov. 15 that it purchased Grace Pacific LLC from major local landowner Alexander & Baldwin.

Nan Inc. purchased the state’s largest asphalt paving contractor for $57.5 million, according to a filing with the U.S. Securities and Exchange Commission. The purchase marks a significant expansion for Nan in the Hawai‘i market; the general contractor currently maintains a presence in Hawai‘i and on Guam and Kwajalein Atoll.

“We are thrilled to welcome Grace Pacific to the Nan Inc. family,” said Nan Chul Shin, founder and owner of the company in a statement. “This acquisition allows us to enhance our service offerings and better serve our clients and partners throughout Hawai‘i. We are excited about the potential for innovation and growth this partnership will bring.”

Grace Pacific will continue to operate under their current branding, Shin added. Current management and staff will remain on board to help facilitate a smooth transition of ownership.

The sale is part of a strategy by A&B’s Hawai‘i-based real estate investment trust to simplify its core business and sharpen its focus on Hawai‘i’s commercial real estate market. One of the original “Big Five” companies of territorial Hawai‘i — with businesses that encompassed several industries, including agriculture, shipping and railroads — A&B has moved to streamline operations in recent years, with Grace Pacific being the last significant, non-core asset it still owned.

A&B originally acquired Grace Pacific in 2013 for $235 million, with the addition touted as an investment in Hawai‘i’s growing development and construction sector, as well as a way for A&B to capitalize on their own plans for growth in real estate and development, according to a 2013 news release announcing the purchase.

In 2019, however, A&B lowered the valuation of Grace Pacific in a third quarter earnings release report and indicated it was looking to sell off the company. According to release documents, the company “recorded $49.7 million non-cash impairment related to goodwill … in view of Grace’s recent financial performance, which produced an operating loss of $57.9 million for the Materials & Construction segment.”

The earnings release also noted performance challenges faced by A&B’s materials and construction business, which included Grace Pacific operations.

In July 2022, nearly nine years after purchasing the company, A&B expressed its intent to sell off Grace Pacific to “a more natural owner.”

“This transaction not only marks a significant milestone in the evolution of [A&B], but also facilitates a path for success and growth of Grace Pacific under the stewardship of Nan Inc.,”  A&B president & CEO Lance Parker said when the sale was announced on Nov. 15.

Founded in 1931, Grace Pacific benefited greatly by the post-statehood construction boom of the 1960s. Over the ensuing 50 years, the company continued to grow as it played a vital role in helping develop and maintain Hawai‘i’s infrastructure statewide, including work on roads, highways, runways and harbors.

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