Private equipment rental company Orionstone has proposed a nil-premium merger of the two companies to create one of Australia’s top five rental companies.
Formed in Mackay in 2003, Orionstone has facilities in Mackay, Kalgoorlie, Hunter Valley and Perth.
Orionstone said the combined company would have generated sales of $A326 million and pre-synergies earnings before interest, tax, depreciation and amortisation of $93 million on a proforma basis for 2014.
It added that the annualised cost savings would be $34 million.
“The combination would provide shareholders with a business with significant operational upside and a lower cost base which is more resilient through the cycle,” Orionstone managing director Ashley Fraser said.
“We look forward to immediately engaging with the Emeco board and working constructively with them to bring this opportunity to their shareholders.”
Emeco noted that elements of the non-binding proposal were incomplete, including Orionstone not having funding in place.
“Accordingly, there is no certainty that the Orionstone proposal will lead to a transaction and Emeco recommends that shareholders take no action at this time,” the company said.
Perth-based Emeco said it had been reviewing acquisition opportunities and had been considering a number of potential options, including Orionstone.
Orionstone urged Emeco to terminate its proposed acquisition of Rentco, saying a merger would deliver better value.
“The combination of Emeco and Orionstone would create a stronger and more diverse business by industry, commodity and client,” Fraser 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.”
Orionstone is proposing a combined management team and the enlarged company would retain its Australian listing.
Emeco has appointed Macquarie Capital as its financial adviser, while Orionstone has retained JP Morgan.
