Combination will benefit construction and
industrial customers at attractive returns to United Rentals
shareholders
United Rentals, Inc. (NYSE: URI) and BlueLine Rental
(“BlueLine”) today announced that they have entered into a
definitive agreement under which United Rentals will acquire
BlueLine from Platinum Equity for approximately $2.1 billion in
cash.1 The board of directors of United Rentals unanimously
approved the agreement. The transaction is expected to close in the
fourth quarter of 2018, subject to Hart-Scott-Rodino clearance and
customary conditions.
BlueLine is one of the ten largest equipment rental companies in
North America, serving over 50,000 customers in the construction
and industrial sectors with a focus on mid-sized and local
accounts. The company has 114 locations and over 1,700 employees
based in 25 U.S. states, Canada and Puerto Rico. For the trailing
12 months ended August 31, 2018, BlueLine generated an estimated
$313 million of adjusted EBITDA at a 39.8% margin on $786 million
of total revenue.
Strong Strategic Rationale
- BlueLine’s footprint will increase
United Rentals’ capacity in many of the largest metropolitan areas
in North America, including both U.S. coasts, the Gulf South and
Ontario.
- BlueLine has a well-diversified
customer base that aligns well with United Rentals’ base, with a
balanced mix of commercial construction and industrial accounts.
The combination will add more mid-sized and local accounts to
United Rentals’ base.
- The combination will make a broader
range of fleet and services available to BlueLine customers,
creating opportunities to cross-sell specialty solutions.
- The addition of BlueLine’s fleet will
expand United Rentals’ fleet by over 46,000 rental assets with an
original cost of approximately $1.5 billion.
- BlueLine and United Rentals utilize
many of the same technology systems, including RentalMan for field
operations. The two companies have similar rental infrastructures,
which will facilitate the integration and help with the onboarding
of employees.
- United Rentals and BlueLine share many
cultural attributes, including robust safety programs, an intense
focus on customer service and an emphasis on talent development and
engagement.
Strong Financial Rationale
- The purchase price of approximately
$2.1 billion represents a multiple of 6.7x adjusted EBITDA for the
trailing 12 months ended August 31, 2018; and a multiple of 5.4x
adjusted EBITDA including cost synergies and the net present value
of tax attributes estimated at $169 million.
- The acquisition is expected to be
immediately accretive to United Rentals’ adjusted earnings per
share and free cash flow generation and result in a net leverage
ratio of below 3.0x by year-end 2018 on an as-reported basis, with
a strong path for deleveraging thereafter. On a pro forma basis,
the company expects its net leverage to be below 2.8x by
year-end.
- Return on invested capital is expected
to exceed the cost of capital within three years of closing, with
an attractive IRR and NPV.
- The combination is expected to generate
approximately $45 million of cost synergies in the areas of
corporate overhead, operations and third-party re-rent, and improve
returns on BlueLine used equipment sales. Additionally, United
Rentals expects to realize approximately $15 million of fleet and
other procurement savings based on the combined spending.
- The transaction is not conditioned on
financing. United Rentals expects to use a combination of newly
issued debt and bank borrowing to fund the transaction and related
expenses.
CEO Comments
Michael Kneeland, chief executive officer of United Rentals,
said, “The acquisition of BlueLine meets all of our criteria for
long-term, profitable growth at attractive returns. We’re executing
our strategy of ‘growing the core’ in a strong demand environment
to drive superior value for our customers and shareholders. Our
company will be going to market with more talent, capacity and
customer diversification than ever before.”
Kneeland continued, “There are some distinct advantages to the
BlueLine integration, such as our common technology systems and
strong safety cultures. BlueLine has a fleet mix that complements
our own, and a well-diversified base of mid-sized and local
customers, many of whom can use our specialty solutions. We expect
to complete the acquisition in the fourth quarter, setting the
stage for an exciting 2019. I look forward to welcoming our new
colleagues very soon.”
Louis Samson, partner at Platinum Equity, said, “BlueLine has
evolved into a strong industry leader and is in perfect position to
take the next step as part of United Rentals. Following the initial
carve out from Volvo four years ago, we deployed the full range of
Platinum’s M&A&O® tool kit to completely transform the
business. Substantial investments in systems, add-on acquisitions
and other growth initiatives drove improvements in top-line and
earnings performance. It is a natural fit with United Rentals, and
both companies will benefit from the combination.”
Key Acquisition and Transaction Statistics (financial
information in millions)
Purchase Price $
2,100 Net Present Value of Acquired Tax Assets $ 169 Total
Revenues, LTM August 31, 2018 $ 786 Adjusted EBITDA, LTM August 31,
2018 $ 313 Estimated Annualized Cost Synergies Achieved by End of
Year Two $ ~45 Estimated Annualized Cross-selling Benefits Achieved
by End of Year Three $ ~35 Original Equipment Cost of Fleet $ 1,494
Employees ~1,735 Rental Branches 114 Customers ~50,000
United Rentals plans to update its 2018 financial outlook to
reflect the combined operations upon completion of the
transaction.
Repurchase Program
United Rentals plans to pause its current $1.25 billion share
repurchase program upon closing the BlueLine acquisition to
integrate the operations and assess other potential uses of
capital. This is consistent with the company’s approach during the
integrations of NES Rentals and Neff Rental in 2017.
Other
Morgan Stanley & Co. LLC and Centerview Partners acted as
financial advisors to United Rentals, and Sullivan & Cromwell
LLP acted as legal advisor. Barclays and Catalyst Strategic
Advisors acted as financial advisors to Platinum Equity, and Latham
& Watkins LLP acted as legal advisor.
Presentation and Conference Call / Webcast
A presentation about the transaction is available on the
Investor Relations section of the United Rentals website under the
“Investor Presentations” tab. The company will discuss the
planned acquisition on its analyst and investor conference call
today, September 10, 2018, at 11:00 a.m. Eastern Time. The
conference call number is 855-458-4217 (international:
574-990-3618). The conference call will also be available live by
audio webcast at unitedrentals.com, where it will be archived
thereafter. The replay number for the call is 404-537-3406,
passcode is 9575778.
Non-GAAP Measures
EBITDA is a non-GAAP financial measure as defined under the
rules of the Securities and Exchange Commission. United Rentals
believes that this non-GAAP financial measure provides useful
information about the proposed transaction; however, it should not
be considered as an alternative to GAAP net income.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in
the world. As of July 31, 2018, the company had an integrated
network of 1,054 rental locations in North America and 11 in
Europe, with approximately 16,400 employees serving construction
and industrial customers, utilities, municipalities, homeowners and
others. The company offers approximately 4,200 classes of equipment
for rent with a total original cost of $12.4 billion. United
Rentals is a member of the Standard & Poor’s 500 Index, the
Barron’s 400 Index and the Russell 3000 Index® and is headquartered
in Stamford, Conn. Additional information about United Rentals is
available at unitedrentals.com.
About BlueLine Rental
BlueLine Rental serves customers in major construction and
industrial sectors in North America with a network of 114
locations, primarily in the United States, and approximately 1,700
employees. The company has over 46,000 units of fleet in aerial,
material handling, earthmoving, compaction and other general
equipment categories, with an original equipment cost of
approximately $1.5 billion. BlueLine Rental is headquartered in The
Woodlands, Texas. Additional information about BlueLine Rental is
available at bluelinerental.com.
About Platinum Equity
Founded in 1995 by Tom Gores, Platinum Equity is a global
investment firm with approximately $13 billion of assets under
management and a portfolio of approximately 40 operating companies
that serve customers around the world. The firm is currently
investing from Platinum Equity Capital Partners IV, a $6.5 billion
global buyout fund, and Platinum Equity Small Cap Fund, a $1.5
billion buyout fund focused on investment opportunities in the
lower middle market. Over the past 23 years Platinum Equity has
completed more than 200 acquisitions.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and the Private Securities Litigation Reform Act of
1995, known as the PSLRA. Forward-looking statements involve
significant risks and uncertainties that may cause actual results
to differ materially from those set forth in the statements. These
statements are based on current plans, estimates and projections,
and, therefore, you should not place undue reliance on them. No
forward-looking statement, including the updated financial outlook
set forth above and any such statement concerning the completion
and anticipated benefits of the proposed transaction, can be
guaranteed, and actual results may differ materially from those
projected. United Rentals undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future events or otherwise. Forward-looking statements
are not historical facts, but rather are based on current
expectations, estimates, assumptions and projections about the
business and future financial results of the equipment rental
industries, and other legal, regulatory and economic developments.
We use words such as “anticipates,” “believes,” “plans,” “expects,”
“projects,” “future,” “intends,” “may,” “will,” “should,” “could,”
“estimates,” “predicts,” “potential,” “continue,” “guidance,”
“2018E” (to denote 2018 expected) and similar expressions to
identify these forward-looking statements that are intended to be
covered by the safe harbor provisions of the PSLRA. Actual results
could differ materially from the results contemplated by these
forward-looking statements due to a number of factors, including,
but not limited to, those described in the SEC reports filed by
United Rentals, as well as the possibility that (1) United Rentals
may be unable to obtain regulatory approvals required for the
proposed transaction or may be required to accept conditions that
could reduce the anticipated benefits of the acquisition as a
condition to obtaining regulatory approvals; (2) the length of time
necessary to consummate the proposed transaction may be longer than
anticipated; (3) problems may arise in successfully integrating the
businesses of United Rentals and Vander Holding, including, without
limitation, problems associated with the potential loss of any key
employees of Vander Holding; (4) the proposed transaction may
involve unexpected costs, including, without limitation, the
exposure to any unrecorded liabilities or unidentified issues that
we failed to discover during the due diligence investigation of
Vander Holding or that are not covered by insurance, as well as
potential unfavorable accounting treatment and unexpected increases
in taxes; (5) our business may suffer as a result of uncertainty
surrounding the proposed transaction, any adverse effects on our
ability to maintain relationships with customers, employees and
suppliers, or the inherent risk associated with entering a
geographic area or line of business in which we have no or limited
experience; and (6) the industry may be subject to future risks
that are described in the “Risk Factors” section of the Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and other
documents filed from time to time with the SEC by United Rentals.
United Rentals gives no assurance that it will achieve its
expectations and does not assume any responsibility for the
accuracy and completeness of the forward-looking statements.
The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the other risks and
uncertainties that affect the businesses of United Rentals
described in the “Risk Factors” section of the Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and other documents filed
from time to time with the SEC. All forward-looking statements
included in this document are based upon information available to
United Rentals on the date hereof; and United Rentals assumes no
obligations to update or revise any such forward-looking
statements.
1 United Rentals is acquiring Vander Holding Corporation and its
subsidiaries, including BlueLine Rental, LLC (collectively
“BlueLine”).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180910005453/en/
United Rentals, Inc.Ted Grace, 203-618-7122Cell:
203-399-8951tgrace@ur.com
United Rentals (NYSE:URI)
Historical Stock Chart
From Jun 2024 to Jul 2024
United Rentals (NYSE:URI)
Historical Stock Chart
From Jul 2023 to Jul 2024