COATES HIRE DEAL DRIVES LIFT FOR SEVEN
SHARES in Seven Group have soared after the company announced it would buy out its partner in equipment hire company Coates Hire for $517 million.
The Kerry Stokescontrolled company will acquire a 53.3 per cent interest in Coates Hire from affiliate Carlyle Asia Partners II, a fund managed by private equity house The Carlyle Group and minority owners.
Seven said it would fund its latest purchase with existing earnings and cash flow, including proceeds from the sale of its WesTrac operations in China next month – expected to be in excess of $500 million.
It said full ownership of Coates Hire, which delivered a 5 per cent lift in revenue during the year to June, would enhance its portfolio and increase its exposure to industrial services. The group bought into Coates in 2008.
Seven managing director Ryan Stokes said that the equipment hire company was well-placed to deliver value to its investors.
“The move to full ownership of Coates Hire will enhance Seven Group’s position ... with a strong macroeconomic environment and a positive outlook providing the potential for significant opportunities to be realised.”
Shares in Seven, which owns about 35 per cent of Seven West Media, rallied almost 10 per cent or $1.10 to $12.28 yesterday.
Coates generated $308 million in underlying earnings in the year to June.