New Zealand-based heavy equipment company Gough Group is being sold to Malaysian firm Sime Darby for NZ$211 million.
Gough Group has the local Caterpillar dealerships with service territory in New Zealand and interests in the transport and materials handling business in New Zealand and Australia.
Gough Group Limited has entered into a conditional sale and purchase agreement with Sime Darby Berhad which will be fully funded by bank borrowings, on a cash-free and debt-free basis.
It is subject to New Zealand Overseas Investment Office approval and is expected to be completed by 30 September, 2019.
The New Zealand Caterpillar dealership has a rich history spanning 90 years, making it one of the oldest dealerships of Caterpillar equipment outside of the United States.
Gough Group’s transport and materials handling businesses span across construction, infrastructure, transport and power system industries, distributing a wide range of premium global brands, such as SAF, Palfinger and WABCO in New Zealand and Australia.
Gough Group employs around 950 people across a network of over 50 locations in Australia and New Zealand. All Gough Cat and transport service staff at the company will stay on under current terms and contracts under the deal.
In New Zealand, Sime Darby Motors operates under the Continental Cars and City Nissan dealerships in Auckland representing brands such as BMW, Porsche, Volkswagen, Audi, Ferrari and Nissan. It also has a commercial transport arm representing brands such as Volvo, Hino, Mack and UD Trucks.
In Australia, Sime Darby Berhad is represented by Hastings Deering, one of Caterpillar’s leading dealers, as well as through Sime Darby Motors’ dealerships for BMW, Volvo, Ferrari and Rolls Royce in Brisbane and Porsche in Sydney.
Sime Darby Berhad’s group chief executive officer Dato’ Jeffri Salim Davidson says the deal offers great exposure to New Zealand and Australian markets.
“The Gough Group transaction, which would be the largest for Sime Darby Berhad since the pure play restructuring exercise in 2017, provides a rare opportunity for us to enhance our relationship with Caterpillar, and gain exposure to the construction and forestry sectors in New Zealand, further reinforcing Sime Darby Industrial’s footprint in the Asia Pacific region.
“The Gough Group’s transport and material handling portfolio will complement Sime Darby Motors’ commercial truck business in New Zealand, enable growth in aftersales operations and broaden our suite of franchises, essentially strengthening our position in Australasia,” Davidson says.
Gough Group grew its revenue by more than 18% in 2018 to NZ$540 million from the previous year, driven by improvements in sales for both its Caterpillar and transport and material handling businesses.
‘Sad to see the end’
Gough Group chairman Keith Sutton says “it is sad to see the end of the almost 100-year legacy of Gough family ownership”.
However, “stakeholders should be excited about the future direction of the business”, he says.
In 2018, shareholders started asking questions about the long-term future for the company and asked executive management to work through a range of options.
“Through the strategic review process, the board and shareholders focused on the best interests of the company and its customers, suppliers and employees.
“We are confident that, under Sime Darby’s ownership, the outlook for the business will be strengthened, service to customers enhanced, and opportunities for our employees improved,” Sutton says.
Gough Group chief executive Liz Ward says the new owners “have a wealth of industry knowledge and a clear commitment to our people and customers, which was very important to the shareholders and the board”.
Customers should expect ‘business as usual’
In a letter to customers, Gough Cat executive general manager Chris Heaton says dealership operations “will not change significantly” under the new ownership and “key day-to-day relationships will stay the same”.
“The board and shareholders agreed that transferring ownership to a new owner with the capital and capability to strengthen the business is in the company’s best interests. We are confident that Sime Darby’s ownership will strengthen the outlook for the business, enhance service to customers and improve opportunities for staff,” Heaton says.
“Caterpillar and the existing shareholders want to see the transition take place as smoothly as possible.
“The new owners will continue to support your business to the high standards that are expected by Caterpillar.
“We would have liked to have shared an update with you sooner, but details about the transaction and buyer were confidential until now.”
In the meantime, customers can expect “business as usual,” Heaton says.
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