Perenti’s Best Tractor Parts sale proves slow going

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The wheels appear to be turning slowly for the sale of Perenti’s Best Tractor Parts division, and some are wondering whether Emeco will emerge as an interested contender for part of the business down the track.

Bank of America is running a sales process for the business that sells earthmoving parts, and estimates suggest it is worth between $100m and $200m.

So far, Seven Group Holdings has been mentioned as a possible contender.

Market analysts believe the attraction for Seven would be the used parts and maintenance component of the operation for its WesTrac business, the sole authorised Caterpillar dealer in Western Australia, NSW and the ACT.

However, the equipment hire business would be ideally suited to the Australian-listed Emeco.

Emeco is understood to have looked at the business about two years ago, when Perenti was named Ausdrill and had not yet merged with Barminco.

But DataRoom understands it is not a bidder for BTP in the Bank of America-run process.

One challenge for Emeco could be funding, after it completed a major recapitalisation in recent years to place it back on sure footing.

It is thought that Perenti is not desperate to sell the operation, but its strategic focus is surface and underground mining and BTP is non-core.

Seven Group is likely to be less keen on the hire component of the business that counts coalminer Peabody Energy as a major customer, say analysts.

One logical outcome is a break-up of the operation.

Market experts say another logical owner of the business is H-E Parts, which was sold four years ago by Odyssey Private Equity to Hitachi Construction Machinery.

In recent months, Perenti had UBS on standby for an equity raising to buy Downer’s mining services division.

However, the Perenti share price fell on the back of COVID-19 disruptions and, at about the same time, Downer placed a sale of the unit on hold.