07.10.2007

Coates goes to National

Coates, Australia largest rental company has been acquired by National Hire the countries second largest rental company and a Cat Rental store franchisee.

The deal, worth A$2.2 billion ($2/£0.97 billion), was completed in partnership with American private equity firm the Carlyle Group.

National Hire which is controlled by Westrac, the Caterpillar dealer in New South Wales and Western Australia, will merge its rental operations into that of Coates with the combined business being known as the Ned Group.

The integration is expected to take 12 to 18 months to complete. Malcolm Jackman has been appointed as CEO of the merged operation and will be assisted by National Hire's and Coates' existing management teams.

National Hire will remain as a public company owning 47 percent of the Ned group and sitting on a A$40 million cash pile. Westrac, which controls National, is owned by private investment company Australian Capital Equity which is owned by Kerry Stokes. Coates largest shareholder, Elph Pty, which is owned by Tasmanian based Dale Elphinstone, will take a 20 percent stake in National Hire.

The Carlyle group is contributing A$339 million ($305/£149 million) in cash towards the deal, its local managing director Simon Moore said: "It's a very fragmented market and we have created the largest player with a market share of about 20 per cent," Carlyle

The combined operations companies had rental revenues of A$990 million ($890/£436 million) last year and earnings before interest and tax of A$202 million. Costs savings of around A$30 million have been suggested once the two business are merged. Both companies have significant access rental operations.

Coates began its ‘strategic review’ earlier this year and opened the sale process two months ago. See Coates begins bid process At one time Loxam of France was said to be front runner, then at the end of Augusts it claimed that it had abandoned any sale. but National Hire emerged as the last remaining bidder last month after increasing its bid.