Australian mining equipment supplier Emeco’s acquisition of road freight specialist Rentco is under threat after institutional investors refused to back the deal.
Emeco had agreed to pay A$53 million (€38 million) for the business, which is also based in Australia, as part of its diversification strategy. The total value of Rentco, including debt, is A$82 million (€59 million).
However, reports in The West Australian newspaper said that First Samuel and Black Crane Capital, which between them own nearly a quarter of Emeco Holdings, had written to Emeco chairman Alec Brennan voicing their concerns.
The reports said the investors objected to both the value and the timing of the purchase and asked Emeco to scrap the acquisition. If this does not happen in the next two weeks, they could requisition a shareholders’ meeting to appoint a new board.
At the time of the acquisition, Emeco managing director Ken Lewsey said: “Rentco is one of the few players in the sector that has scale, national presence and a solid reputation, particularly for its asset reliability, as well as a strong brand.”