News story

Ashtead to pay USD1 billion for rental equipment company

Thursday, 27 July 2006 ( #270 ) - SURREY, United Kingdom
Ashtead Group plc has signed a conditional agreement to buy the US's sixth largest equipment rental company, NationsRent Companies Inc, for USD1 billion.

Ashtead will pay USD600 million in cash and take on USD400 million in debt. An additional payment of USD89 million is contingent on Ashtead's share price hiking above GBP2.731 (USD5.07). Ashtead's current share price is GBP1.415 (USD2.63).

The purchase will be partly funded by a GBP150 million (USD278.6 million) rights issue, but the issue is not available to residents of the US, Australia, Canada, France, Japan or New Zealand, because of those countries' securities laws.

Ashtead rents forklifts, aerial work platforms, backhoes, excavators and other equipment through its subsidiaries US-based Sunbelt Rentals and UK-based A-Plant. The acquisition could result in Ashtead becoming the US's third largest equipment rental company and the world's second largest by rental revenues, according to Ashtead's documentation on the proposed purchase and rights issue.

An Ashtead statement said NationsRent was an "excellent fit with Sunbelt" by business type and geography. NationsRent has USD1 billion in rental fleet, of which USD665 million was purchased in June 2003.

The merger of NationsRent and Sunbelt would create a chain of 477 stores with overlap only in about 25 locations. NationsRent has 268 stores in 26 states and 100 centres within US building products retailer Lowe's Companies Inc's stores.

NationsRent, founded in 1997, experienced a six per cent growth in rental revenue to USD491 million for the year ended December 31, 2005, compared to 2004. For first quarter, ended March 31, rental revenue grew 11 per cent to USD112 million.

There would be one-time integration costs of USD20 million but Ashtead expected to make cost savings of at least GBP20 million (USD37.1 million) a year through synergy opportunities.

The acquisition was expected to be finalised at the end of August. Sunbelt CEO Cliff Miller will manage integrating NationsRent into the group.

An Ashtead EGM to approve the acquisition and share sale will be on August 4.
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