Merger could create one of Australia’s ‘top five’
By Steve Ducker09 April 2015
Australia’s Orionstone has proposed a merger with Emeco to create one of the country’s “top five rental companies”.
Orionstone said a combined business would be “more diversified by industry, commodity and client” while offering “complementary rental models to better support customers”.
Emeco’s own desire to pursue a strategy of diversification under managing director Ken Lewsey is already well documented.
Indeed, the mining equipment rental company believed it had taken a step in that direction last month with the acquisition of road freight specialist Rentco.
However, institutional investors wrote to Emeco’s chairman voicing their concerns about the timing of the deal, which Emeco now aims to complete by 30 April.
On its website, Emeco described the Orionstone proposal as “unsolicited and non-binding” and said “there is no certainty it will lead to a transaction”.
The company added: “Emeco remains actively engaged in considering a number of potential opportunities, including Orionstone.”
Discussing the potential merger, Orionstone said that based on the year ending 31 December 2014, a merged company would generate sales of A$326 million (€325 million), with EBITDA of A$93 million (€67 million).
It believes a new company could take A$34 million (€24.5 million) of operating costs out of the business.
In the same period, Orionstone - one of Australia’s largest privately owned heavy earthmoving equipment rental providers – posted revenues of A$75 million (€54 million). Gross margin and utilisation were up by 13% and 3% respectively.
Ashley Fraser, managing director of Orionstone, said: “Together we would draw on the complementary assets and collective expertise of both companies’ management and employees to provide customers with a broader suite of assets and an enhanced service offering.”