Emeco to acquire another equipment company

Image: Emeco

Emeco plans to acquire machinery rental business Matilda Equipment for $80 million, the second major deal the mining equipment supplier has secured in the past six months.

Matilda Equipment specialises in individual rentals of high demand, low hour, late model mining ancillary equipment. Its niche business model focuses on premium rates and low repair and maintenance costs.

The deals adds to Emeco’s recent $69.8 million acquisition of equipment rental and maintenance business Force Equipment, which was first announced last October.

Emeco managing director and chief executive Ian Testrow believes an acquisition of Matilda Equipment will provide the company with a niche equipment rental business that will allow it to deliver an additional service offering.

“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,” Testrow said.

“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. There is strong strategic rationale for combining and creating value for these two businesses.”

Emeco intends to fund the acquisition through an entitlement offer to raise around $90 million. The entitlement offer will be used to fund the acquisition, transaction costs associated with the offer and deal, and working capital.

Perth-based Emeco will launch the offer of around 360 million shares on Wednesday at an issue price of 25 cents a share.

Matilda Equipment owns a fleet of 83 pieces of mining equipment. The fleet has an average age of 9300 hours compared to the existing Emeco portfolio average of 25,000 hours.

Testrow said there was a strong cultural alignment between Matilda Equipment and Emeco, centred on entrepreneurialism and a customer-first approach to providing equipment rental solutions.

“Matilda Equipment’s deep relationships in the market, in conjunction with its strong procurement capabilities when combined with Emeco’s existing platform presents an exciting opportunity for Emeco going forward,” Testrow concluded.