Australia’s largest rental company Coates Hire last week rejected takeover proposals worth up to AU $1.55 billion (about U.S. $1.26 billion) and plans to restructure the business and continue its growth strategies.
“The board has unanimously determined that the proposals received from interested third parties are not at an appropriate value to justify recommendation by the board,” said Coates chairman Bill Cutbush. “Accordingly, they have failed on price. Similarly, the bids received do not reflect any appropriate synergy benefits that would be available, particularly considering Coates’ leading market position and strong geographical footprint.”
Cutbush said the company will concentrate on value-enhancing strategies and strategic initiatives.
“Building on the solid performance in fiscal 2007, when combined with positive trading conditions during the first two months of fiscal 2008, a growing order book for key customers, and a strengthening macro outlook, the company is highly confident of delivering strong results in this fiscal year and beyond,” Cutbush added.
Coates’ board said the offers received were reflective of the deterioration in the global debt markets and uncertainty in the equity markets.
According to Australian press reports, top bidders included a consortium comprising global private equity firm Carlyle Group and National Hire Group, an Australian rental company.
Coates last week reported a net profit for its fiscal year ended June 30 of AU $102.4 million (about U.S. $83.6 million), a 9.4-percent increase from the previous year. Volume jumped 7.7 percent year over year from AU $715 million in fiscal 2006 to $770.4 million this year. Operating cash flow was AU $236.4 million for the year, a 29 percent year-over-year hike.
Coates officials added that although the company has concluded its strategic review, it would still devote thorough consideration to future credible offers.