Newsletter #320 (View other news stories)
World’s largest rental company could be sold this year
GREENWICH, CT, United States
Thursday, 26 Jul 2007
 Michael Kneeland |
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United Rentals has signed an agreement to be acquired by private equity company Cerberus Capital Management LLC for USD6.6 billion.
In April, United Rentals announced it had retained UBS Investment Bank and Credit Suisse as advisors to explore strategic alternatives to maximise shareholder value. A sale of the company was touted as a possibility (Forkliftaction.com News #306).
The transaction value includes the assumption of USD2.6 billion in debt.
Shareholders will receive USD34.50 cash per common stock. This is a 25% premium over United Rentals’ closing share price of USD27.55 prior to the April 10 announcement.
Company chairman Bradley S Jacobs says this is a favourable agreement for its shareholders.
"A decade ago, we started United Rentals with a little more than a concept and achieved industry leadership in just 13 months. Today, we remain the pre-eminent equipment rental company in the world."
United Rentals was established by co-founder Jacobs in 1997 with start-up equity of USD35 million. On July 23, United Rentals signed a definitive merger agreement to sell the company to Cerberus for almost 200 times the initial investment.
The board of directors has approved the agreement and recommended shareholders approve the transaction.
Under its agreement with Cerberus, United Rentals can continue soliciting proposals for alternative transactions from third parties for a 30-day period through to August 31. The equipment rental company says it will not disclose developments in the solicitation process unless its board makes a decision on any proposals.
If no alternative transactions emerge, the sale is expected to be finalised later this year, CEO Michael Kneeland says.
The company claims to be the world’s largest equipment rental company – its annual revenues are about USD3.9 billion, it has more than 12,000 employees and USD4 billion in rental fleet in 690 locations.
As of Dec 31, 2006, United Rentals had over 260,000 machines in over 20,000 equipment classes in its fleet.
Kneeland says recent data shows its fleet has 73,555 forklifts, 10,445 telehandlers and 72,401 self-propelled scissors and booms.
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