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Coates Hire board to recommend acquisition by Carlyle and National Hire

Coates Hire, Australia’s largest equipment hire company, has accepted an improved offer from the Carlyle Group and its smaller competitor National Hire Group worth AUD 1.7bn, offering shar

Coates Hire, Australia’s largest equipment hire company, has accepted an improved offer from the Carlyle Group and its smaller competitor National Hire Group worth AUD 1.7bn, offering shareholders a total cash payment of AUD6.70 per share.

A meeting of the Coates shareholders to vote on the proposed deal is expected to be held in December. The board had previously commissioned a strategic review with its advisers, Booz Allen Hamilton and Macquarie Bank, which revealed further opportunities for value creation in the business.

The board committee responsible for examining Coates’ strategic options says the value of the offer from Carlyle and National Hire, unlike previous offers received, is sufficiently high to earn its recommendation and the opportunity for shareholders to decide whether to accept or not.

The total cash payment of AUD6.70 per share to shareholders is 49 cents above the share price at the close on October 1, adjusted for the final dividend, at a 32 per cent premium to the 30-day volume-weighted average price prior to the announcement of the strategic review in May, and at a 16 per cent premium to the volume-weighted average price in the thee months to October 1, as well as higher than the all-time high closing day price of AUD6.55.

‘The committee’s primary concern has been and continues to be to act in the best interest of shareholders, with the view to maximising value,’ says Coates chairman Bill Cutbush. ‘I am proud of our record at Coates, a well-run company with a history of strong profits and a sound strategy based on growth and diversification.

‘Over the past five years we have delivered year-on-year growth in sales, profits, and dividends. The continuation of current operations, pursuit of value-enhancing strategies and implementation of strategic initiatives we announced last month was a realistic plan to deliver growth into the future.

‘Ultimately, however, 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.’

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