new bid chatter, page-40

dklbrooks, i can't believe all this stuffing around for a misely $100m or LESS THAN 5 per cent increase, on either a cum or cash basis when you compare the previous bid to the current bid of yesterday!

comparing the last cash bid to the current cash bid you had a $6.29 cash offer as against the current cash bid of $6.59 equating to a 30 cents increase or 4.7694753 per cent !

on a cum basis, the last cum offer was $6.40 as against the current bid of $6.70 a 30 cents increase or 4.6875 per cent

averaging the increase in cash and cum bids in the lates bid = an average increase in the bid of 4.72848765


Stokes in $2.2 bn Coates Hire buy
October 03, 2007 06:00am

KERRY STOKES has again joined hands with private equity with a $2.2 billion deal to seize control of listed equipment hire group Coates Hire.

In the biggest leveraged buyout deal since global credit markets went into a tailspin in July, the Stokes-controlled National Hire has teamed up with US-based leverage buyout house Carlyle to create Australia's biggest equipment rental business.

National Hire and Carlyle Group will acquire all Coates shares for $6.59 cash per share, up from their offer of $6.29 last month. The offer comprises $6.06 a Coates share in cash, plus a fully franked special dividend of 53c.

Mr Stokes' private investment company Australian Capital Equity owns Westrac, which controls National Hire.

Through ACE, Mr Stokes has long held licences to sell and rent Caterpillar and other heavy construction equipment.

The combined operations of the two groups had annual hire revenues of $990 million last financial year and earnings before interest and tax of $202 million. The buyers estimated that they would get savings of more than $30 million per annum but they could not quantify one-off costs at this stage.

"It's a very fragmented market and we have created the largest player with a market share of about 20 per cent," Carlyle local managing director Simon Moore said.

The deal comes after last week's $440 million purchase of Hoyts by local private equity player Pacific Equity Partners, and underscores the fact that the local debt market can still digest deals of considerable scope.

"The markets are well and truly open for deals of this size," Mr Moore said.

He said the impetus behind the deal was the China-driven mining boom and the pent-up demand for better infrastructure across Australia after chronic underspending by governments since the 1990s.

National Hire will transfer its rental business into the merged entity, which will be known as Ned Group, with Carlyle contributing $339 million in cash.

Ned Group will be led by Malcolm Jackman and managed by a combination of National Hire's and Coates' existing management teams.

Industrial business integration consultant Tony Dage will also join Ned Group to lead the integration of the two rental operations, which is expected to take 12-18 months to complete.

The new group will rent and maintain digging, earth moving and construction equipment for mining, road building and other major infrastructure projects.

To help fund the bid, National Hire will raise $86 million at $3 a share. Dale Elphinstone's Tasmania-based Mr Elphinstone and his Elph Pty Ltd - Coates biggest shareholder - will emerge with 20 per cent of National Hire.

The buyers upped their previous bid after further talks with the board of Coates, which has unanimously recommended the bid to the Coates shareholders.

The Coates board began the sale process months ago, aiming to obtain about $2.2 billion. There was some interest from French group Loxam, but by last month, the prospective buyers had been reduced to one. Talks with the board have continued in recent weeks.

Prospects for large buyouts of listed entities by private equity groups have dimmed since the credit squeeze lifted interest rates and reduced the leverage risk they are prepared to take.

Debt markets in the US and Europe remain closed but Australian trading banks and Asian banks, particularly in Japan, have stepped into the breach.

These institutions stayed out of underwriting increasingly highly leveraged private equity deals over the past 18 months or so.
Funding for the Coates buyout is lead by a group of seven banks including ABN AMRO, ANZ, Calyon, Mizuho, Sumitomo, Westpac and Goldman Sachs.

"Following the transaction, National Hire will remain a listed company in its own right," National Hire chairman Ray Romano said.

"It's major assets will comprise our capital sales business, a 47 per cent economic interest in the merged Coates/National Hire rental business and net cash of approximately $40 million."

Carlyle has experience in the equipment rental industry through its 18 per cent interest in the world's largest car rental company, Hertz.