Competition analysis: Barriers to entering the market at the local level appeared to be low. Barriers to expansion to a scale similar to the merged firm, having a full range of hire equipment and a network of branches throughout Australia, appeared to be more significant but were largely in the form of capital investment and to a large extent were not sunk. The merged firm appeared likely to be constrained by existing and potential competitors, including both smaller general equipment hire companies and national specialist companies.
WesTrac, the Caterpillar dealer for Western Australia and New South Wales, was likely to hold a non-controlling interest in the merged firm post-acquisition. WesTrac held a 67% interest in National Hire at the time of the announcement of the acquisition proposal.
Competitors to the merged firm appeared to have alternatives to Caterpillar when sourcing equipment.
In relation to Coates' suppliers which may have been replaced by National Hire's suppliers after the proposed transaction, it appeared likely there were other distribution channels to market, and equipment manufacturers may have had the ability to enter the rental market themselves.
NHR Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
