NZ anti-trust regulator gives thumbs up for Hirepool to buy Hirequip
The Commerce Commission has cleared rental equipment operator Hirepool to buy Hirequip out of receivership, saying the two operate in different sectors and are hindered by their rivals.
The regulator did not find any significant overlap between Hirepool and Hirequip in the hire of heavy construction and earthworks equipment, and that a merged entity would be constrained by competition at a sub-regional level. The low barriers to entry also fed into the commission's consideration.
"The commission is satisfied that the proposed acquisition would be unlikely to substantially lessen competition in any of the relevant markets," chairman Mark Berry says in a statement.
Hirepool, which is 75 percent owned by Australian private equity firm Next Capital, requested the commission clear its acquisition in October, saying the merger will not substantially cut competition as they largely operate in different areas.
A sale and purchase price agreement has yet to be negotiated, though Hirepool's takeover would have to satisfy Hirequip's secured creditor Westpac Banking Corp, which is owed $117.8 million.
Hirequip's unsecured creditors are also owed $76.9 million, according to the first receiver's report.
Hirepool says the deal would give it a "meaningful presence in the high value heavy and building segments", an area it is not really exposed to. Its existing customers are largely small and medium construction businesses which it targets with specialist equipment, it says.
The company pointed to the Christchurch earthquakes as a "catalyst for growth" and led to new entrants into the market and expansion by existing players.
Hirequip's parent shareholding companies Pacific Equipment Solutions, PES Finance and Hire Equipment Group are the entities placed in receivership in July, and came just a month after boss Rob Nichols was quoted as saying the company could seek a listing on the NZX as earnings recovered.