United Rentals Adds Chicago-Based Peer NES for Almost $1 Billion

Equipment rental giant United Rentals (URI) said late Wednesday it would acquire NES Rentals in a cash deal valued at about $965 million. Chicago-based NES specializes in providing cranes and other aerial equipment to more than 18,000 industrial and nonresidential construction customers. The company, which is majority-owned by private equity firm Diamond Castle Holdings, has 73 branches and about 1,100 employees spread mostly throughout the eastern half of the United States, generating Ebitda of $166 million on sales of $369 million in 2016. Stamford, Conn.-based United Rentals is a rollup founded by Bradley S. Jacobs, the current CEO of XPO Logistics (XPO), and was a prolific acquirer from 1997, when it was formed, into the late 2000s. In recent years, it has been more deliberate: This is the company's first major deal since its 2014 purchase of Beaumont, Texas-based National Pump for $780 million. The buyer in a statement said that the purchase of NES would increase its branch footprint and give it additional density in strategically important markets in the East Coast, Gulf States and Midwest. With the overlap United Rentals said there are "meaningful opportunities for cost synergies," as well as opportunities to strengthen customer relationships. "This exciting transaction will augment our revenue, earnings, Ebitda, free cash flow and overall scale, and expand our base of local and strategic accounts at a key point in the demand cycle," United Rentals CEO Michael Kneeland said in a statement. "In NES, we're acquiring a well-run operation that's primed to benefit from our technology, infrastructure and cross-selling capabilities." The agreement is not conditioned on any financing requirements, with United Rentals expected to use a combination of cash on hand, existing capacity under its ABL facility and newly issued debt to fund the purchase. New York-based Diamond Castle acquired then publicly traded NES in May 2006 for $850 million. The company, which had been created through 42 acquisitions, had a stay in bankruptcy in 2003-04 but emerged with its bondholders taking control in a debt-for-equity swap. The deal comes on the same day that United Rentals reported better-than-expected fourth-quarter earnings and revenue on strong demand for its equipment. The company, the world's largest provider of heavy rental equipment, also boosted 2017 revenue forecasts to between $5.75 billion and $5.95 billion, ahead of what analysts were expecting. For the full story, visit http://url.ie/11o1s.