Mining equipment supplier Emeco plans to buy equipment rental and maintenance business Force Equipment for $69.8 million.
Emeco believes the acquisition will provide several benefits, including improved scale in earthmoving rental, a highly complementary fleet, and strategically located maintenance facilities in Perth, Port Hedland, Kalgoorlie and Mackay.
Perth-based Emeco will fund the acquisition through a fully underwritten pro-rata accelerated non-renounceable entitlement offer on the ASX to raise $80 million.
Managing director Ian Testrow said the acquisition represented an important step in realising Emeco’s strategy of becoming a world-leading provider of equipment rental.
“The acquisition of a market leading business like Force will allow Emeco to grow our rental business in key markets, enhance all-important maintenance capabilities and diversify our customer exposure, including in the iron ore market in Western Australia through its workshop in the Pilbara,” Testrow said.
“Force’s component rebuild capabilities will also mitigate risk of component supply disruption at a critical time in the market.”
Force owns 179 pieces of low-hour equipment, according to Emeco. When the fleets of both companies are combined, Emeco believes the enlarged group will be positioned favourably to provide existing and new customers with “innovative, creative and high quality equipment rental”.