UPDATE 2-Australia's Coates Hire accepts A$1.7 bln deal
Tuesday October 2, 2007, 2:17 pm
(Recasts with bid details, company confirmation)
By Ben Wilson
SYDNEY, Oct 2 (Reuters) - Australian equipment hire firm Coates Hire Ltd (ASX: COA.ax) accepted on Tuesday a A$1.7 billion ($1.5 billion) offer from rival National Hire Group Ltd (ASX: NHR.ax) and Carlyle Group [CYL.UL], ending a long-running sale process.
Coates said National Hire and private equity firm Carlyle offered A$6.59 per share, rising to A$6.70 including Coates' final dividend. Including the dividend, the deal is worth A$1.7 billion based on Coates' shares on issue.
Coates, which hires out everything from portable toilets to generators to the building, mining and energy sectors, put itself up for sale in June after poor results. In August, it rejected takeover offers, which sources said included a A$6.25 bid from National Hire and Carlyle, as too low.
National Hire and Carlyle have formed a new company, Ned Group Holdings Pty Ltd, to acquire Coates and National Hire's rental services business. National Hire and Carlyle will each hold a 50 percent voting interest in Ned Group, which will be led by Coates' Managing Director Malcolm Jackman.
The merged operations will have annual hire revenues of around A$990 million, based on the companies' 2007 results, National Hire and Carlyle said in a statement. They said they expected synergy benefits of more than A$30 million a year.
Coates earlier requested a halt in trading of its shares but gave no further details. A source familiar with the matter had told Reuters earlier on Tuesday a revised deal had been agreed.
Coates' shares closed at A$6.10 on Monday, having risen almost 5 percent since it rejected the sweetened bid on Sept. 5. Shareholders and analysts had criticised Coates' decision to reject the offers, saying shareholders should have been consulted.
National Hire and Carlyle said the transaction would be funded from new debt finance and equity contributions. They said financing commitments for the new debt had been obtained from seven domestic and international financial institutions. (Additional reporting by Michael Smith) ($1=A$1.12)
Coates board ticks National Hire offer
Tuesday October 2, 2007, 2:36 pm
Coates Hire Ltd's board has recommended its shareholders accept a sweetened $6.70 per share offer from smaller rival National Hire Group Ltd and private equity firm the Carlyle Group.
The latest offer will result in a cash payment to shareholders of $6.59 per share, plus a final dividend of 11 cents being paid on October 3, 2007.
It will deliver a total value of up to $6.97 per share, including the franking credits attaching to the final and special dividends in accordance with the offer, the board said.
Earlier this month, Coates rejected a $6.29 a share offer from the pair, or $6.40 after including Coates's final dividend for fiscal 2007 of 11 cents.
Coates board committee said it had unanimously decided to recommend the offer to shareholders.
"The committee believes the value of this offer, unlike the previous offers received, is sufficiently high to warrant the committee's recommendation and the opportunity for shareholders to decide whether to accept or not," it said in a statement.
The committee has signed a scheme implementation agreement under which the consortium would acquire Coates for a total cash consideration of $6.59 per share, comprised of $6.06 cash, and a $0.53 special dividend.
At that price, the offer puts a market value on the company of $1.65 billion, compared to the consortium's $1.58 billion offer earlier this month.
The consortium has formed a new company, Ned Group Holdings Pty Ltd, in which National Hire and Carlyle will each have a 50 per cent voting interest, to buy Coates' and National Hire's rental services business.
The merged rental operations will be the leading equipment hire business in Australia, the companies said.
It would have annual hire revenues of about $990 million and earnings before interest and tax (EBIT) of about $202 million.
The estimates are based on both companies fiscal 2007 financial performance.
Ned Group, which will be led by Malcolm Jackman, will fund the deal through new debt finance and equity contributions from each of the parties.
National Hire executive chairman Ray Romano said National Hire would remain a listed company in its own right.
"Its 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," Mr Romano said.
The proposed deal is subject to a number of conditions, including the approval of Coates' shareholders, who are expected to vote on the scheme at a meeting in mid-December.
COA
coates hire limited
