Hirepool seeks clearance to buy rival Hirequip out of receivership
BUSINESSDESK: Equipment rental company Hirepool has sought clearance by the anti-trust regulator to buy rival Hirequip out of receivership in a bid to get greater exposure to the heavy construction sector as the Christchurch rebuild starts hitting its stride.
Hirepool, which is 75% owned by Australian private equity firm Next Capital, has requested the Commerce Commission clear its acquisition, 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.
The company indicated it was willing to go beyond merely paying the purchase price, according to the public version of its application, which had sections blacked out.
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.