COA coates hire limited

sanity prevails... at long last

  1. 4,263 Posts.
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    My thoughts on the previous bid for COA and their financial performance are very well known on this site!

    At the end of the day, i really think it ($6.97)was just too good a deal for the COA independant directors to pass up,and with not alot of other options on the table,a unstable global interest rate enviroment, i think ALL at COA had but little if no choice but to recommend the current bid put before them on 2/10/07, in order to help preserve everyones ongoing careers in the industry and potential board seats down the track

    *from egoli.com.au
    Coates Hire Limited to recommend acquisition proposal
    2/10/2007 By: Niraj Shah

    Coates Hire Limited (COA), Australia’s largest equipment hire company, said it will recommend a revised $1.65 billion takeover or offer from a consortium comprising National Hire Group Limited (NHR) and private equity firm, Carlyle Group. Last month Coates rejected a $6.29 per share bid, which valued the company at $1.58 billion.

    The independent committee of the board, comprising non-directors has unanimously recommended the sweetened offer, saying the proposal is in the best interests of Coates shareholders.

    “The Committee believes the value of this offer, unlike the previous received, is sufficiently high to warrant the Committee’s recommendation opportunity for shareholders to decide whether to accept or not,” it said a statement.

    The $6.59 per share offer is comprised of $6.06 cash and a 53c per share special dividend.

    The offer price represents a 37% premium to Coates’ closing share price of $4.80 on 5 April 2007, and a multiple of 13x earnings before interest and tax for the year ending 30 June 2007, National Hire said.

    In addition, Coates said that under the terms of the offer shareholders will receive the final dividend for the financial year ended 30 June 2007 of 11c payable on 3 October bringing the total cash payment to $6.70.

    With franking credits of 4c and 23c respectively attaching to the final dividend and special dividend, the total value is $6.97 for shareholders who can make full use of the franking credits.

    Coates chairman Bill Cutbush recommended the offer adding that the combination with National Hire was likely to unlock value for shareholders.

    “The improved offer from the Consortium allows shareholders to benefit from the inherent value of the Coates business and a share of the synergies that will be secured on the combination of the Coates and National Hire businesses,” he said.

    Coates’ shareholders will be asked to approve the Scheme of Arrangement at a shareholders meeting expected to be held in mid December 2007.

    The bidding consortium has formed a new company, called Ned Group Holdings Pty Limited to acquire Coates and National Hire’s rental services businesses.

    National Hire and Carlyle will each hold a 50% voting interest in Ned Group according to a statement issued by National Hire.

    The rental operations of Coates and National Hire will be merged within Ned Group to create the leading equipment hire business in Australia.

    Synergy benefits in excess of $30 million per annum are expected to be realized from the transaction once the two businesses have been fully integrated, National Hire said.

    National Hire added that it would fund its equity contribution of approximately $339 million by the transfer of its rental business to Ned Group for $282 million and $57 million in cash.

    Carlyle will contribute $339 million in cash, it said.

    As part of the transaction, National Hire’s existing debt will be transferred to Ned Group with its rental business and will be refinanced.

    Following the transaction, National Hire said it would remain a listed company in its own right and its major assets will comprise its capital sales business, a 47% economic interest in the merged Coates, National Hire rental business and approximately $40 million.

    *from ninemsn.com.au

    Coates board ticks National Hire offer
    Tuesday Oct 2 14:36 AEST
    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.



 
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