Heavy earth-moving equipment rental company Emeco Group has signed an agreement to acquire Australia-based Matilda Equipment for a consideration of A$80m ($60.6m).
Matilda Equipment is primarily engaged in individual rentals of high-demand, low-hour, late-model mining ancillary equipment.
The company’s business model is focused on combining premium rates with low repair and maintenance costs.
Emeco noted that the acquisition will provide a complementary business model, enabling it to sustain its ongoing capital expenditure for ancillary equipment more effectively.
The acquisition is also expected to enable the company to increase its service offering by providing an additional 83 pieces of ancillary equipment to customers.
Emeco Group managing director and CEO Ian Testrow said: “By specialising in low-hour, late-model, in-demand ancillary mining equipment, Matilda Equipment generates strong EBITDA margins and cash, which is in line with Emeco’s deleveraging strategy.
“Combining Emeco and Matilda Equipment also provides Matilda Equipment with a disposal channel as its equipment reaches the end of its first component life, whilst giving Emeco an additional channel for refreshing and sustaining our fleet of ancillary equipment.
“The Force component rebuild capability allows us to run these assets through multiple component lives, extending equipment life, lowering costs and further reducing capital expenditure requirements.”
The latest transaction follows Emeco’s deal to acquire fellow equipment rental and maintenance business Force Equipment for A$69.8m, which was signed in October last year.
Emeco intends to fund the latest acquisition through a fully underwritten A$90m ($68.19m) pro-rata, accelerated, non-renounceable entitlement offer.
Proceeds from the entitlement offer will also be used to meet expenses related to the initiative, as well as various working capital requirements.