National to spin-off Allied?

Coates, best known as a general equipment hirer, bought Allied in 2005, which gave it an entry into the mining-sized equipment hire market.Allied is roughly third to Emeco, after the Caterpillar dealers, in terms of hiring large pieces of earthmoving equipment to the mining sector.The business became part of National when the company, in conjunction with the Carlyle Group, wrapped up a $1.7 billion takeover of Coates Hire in January this year. The acquisition saw National Hire transfer its rental services business to its new subsidiary Coates Group.Before the acquisition, National was primarily a general equipment hirer. It also had the Cat Rental business in Western Australia and New South Wales, thanks to its involvement with WesTrac. Cat Rental hires more construction than mining-sized equipment, and those businesses have become part of Coates.However, National also has a big involvement in the mining industry through its Allight business. This supplies and hires lighting towers, many of which find their way to minesites.National hire managing director Andrew Aitken said suggestions of an Allied spin-off were premature but understandable, given National had been selling some of Allied’s unused fleet.“We’ve been selling equipment that has been lying around and is not on rent,” he said. “Stuff that we don’t see as core for us.”National’s work to integrate its operations with Coates could decide Allied’s future.“We’re going through the final part of the integration,” Aitken said. “We’ll have a better idea of what’s happening with Allied in a month’s time.”Spinning Allied off may not be that hard either, with Aitken admitting Allied had always been run as an independent business within the Coates group. “It doesn’t have orange stuff, it has yellow stuff,” he said. However, at the company’s annual general meeting earlier this month National chairman John Langoulant said the integration was continuing and some $30 million in pre-tax synergies were expected from the combination of the two businesses.Shares in National Hire were last trading unchanged at $1.70 after a 5c fall yesterday.This is an edited extract from a story that will be running in December’s Australia’s Mining Monthly.

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