Emeco ends Rentco acquisition deal


Conditions unable to be met between Emeco and Rentco to facilitate the $53 million deal

Emeco ends Rentco acquisition deal
Emeco's Ken Lewsey and Rentco's Bob Shier.

 

Mining equipment rental company Emeco has called off the acquisition of transport rental provider Rentco, scheduled to be completed by July 31.

In an investor statement, Emeco says the deal was terminated due to the "non-completion of conditions precedent to the deal."

Despite an initial delay on April 30 to provide more time to complete the required conditions, both companies have agreed that it is unattainable.

"Emeco is focused on strengthening its cash flow generation through its core business by maintaining the improved utilisation levels and significantly reducing costs to serve our customers," Emeco’s managing director and CEO Ken Lewsey says.

Announced in March, the $53 million deal between the two Western Australian companies would have seen Rentco operate on a standalone basis with its brand retained.

Rentco’s co-founders and shareholders, John and Bob Shier, would have also remained on fixed contracts.

The termination of the Rentco acquisition was followed by the news merger discussions between Emeco and heavy earthmoving equipment rental supplier Orionstone have been concluded without a deal being reached.

"We are disappointed not to have been able to agree reasonable terms to merge the businesses, however, we must remain disciplined in the use of our shareholders capital, the financing we assume and ensure that any transaction provides Emeco shareholders with fair value," Emeco chairman Alec Brennan says.

Emeco will continue to seek acquisition opportunities despite the failures, its CEO says.

"Our key goal remains to improve the quality and resilience of earnings in the Emeco rental model by increasing the profitability of the core rental business, maintaining the capital base and deleveraging," Lewsey says.

"Given the capacity, flexibility and tenure of our financing, we are well positioned and will continue to evaluate opportunities to participate in consolidation in the sector."

You can also follow our updates by joining our LinkedIn group or liking us on Facebook