Carlyle wins over Coates Hire with latest offer(2)

The Carlyle Group has successfully wooed Coates Hire, an Australian equipment rental company with the third offer it has tabled together with National Hire Group. The transaction, which values Coates Hire at A$1.7 billion, is the largest buyout in Australia this year.

After failing twice before to acquire Australia’s largest equipment rental company Coates Hire, The Carlyle Group and National Hire, a smaller rival, have finally won the company over with an offer that values the business at $1.675 billion ($1.5 billion; €1 billion) excluding debt.

The latest offer of A$6.59 a share on an ex-dividend basis – 30 Australian cents a share up from the second offer – represents a 37 percent premium to Coates’ closing share price of A$4.80 on 5 April, the day Carlyle made its initial approach, according to a statement.

The proposed transaction is the largest buyout in Australia this year after a number of high-profile megadeals valued in excess of A$10 billion fell apart. Bankers have warned in recent months that deals of that scale will probably struggle to find financing, while deals up to $2 billion would probably be more palatable for lenders amid the credit crunch that resulted from the US subprime meltdown.

The independent board committee of Coates of non-executive directors has “unanimously determined to recommend this offer to its shareholders,” according to the statement issued by the consortium. The proposed A$1.675 billion offer equates to 13.3 times the company’s earnings before interest and tax for the year to 30 June 2007.

The US private equity group – which has yet to complete an acquisition in Australia – will contribute A$339 million in cash, and National Hire will fund its equity contribution of approximately A$339 million by transfer if its business to a holding company for A$282 million and A$57 million in cash.

The proposed transaction is subject to shareholder approvals at both Coates and National Hire, as well as court approval of the Coates scheme of arrangement. The deal completion is also subject to “continued financial accommodation from the banking syndicate,” according to the statement.

ABN AMRO, Deutsche Bank and Goldman Sachs JBWere are advising the consortium.