$1.3 billion transaction will expand the
company’s presence in key markets with complementary locations,
fleet and customer mix
Expected to be immediately accretive with
substantial synergies
United Rentals, Inc. (NYSE: URI) (“United Rentals” or “the
company”) and Neff Corporation, operating as Neff Rental (“Neff”),
today announced that they have entered into a definitive agreement
under which United Rentals will acquire Neff for $25 per share in
cash, representing a total purchase price of approximately $1.3
billion. The transaction is expected to be immediately accretive to
cash EPS and free cash flow.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20170816006130/en/
Neff is one of the 10 largest U.S. equipment rental companies,
with a presence in 14 states and a concentration in southern
geographies. Based in Miami, Fla., Neff offers earthmoving,
material handling, aerial and other equipment rental solutions to
its more than 15,500 construction and industrial customers.
Approximately 1,200 Neff employees and 69 branches serve end
markets in the infrastructure, non-residential, energy, municipal
and residential construction sectors.
For the full year 2017, Neff is expected to generate $207
million of adjusted EBITDA at a 49.5% margin on $419 million of
total revenue. As of June 30, 2017, Neff had approximately $867
million of fleet based on original equipment cost.
The boards of directors of United Rentals and Neff unanimously
approved the agreement. Private investment funds managed by Wayzata
Investment Partners LLC, which hold approximately 62.7% of the
outstanding common shares of Neff, have executed a written consent
to approve the transaction, thereby providing the required
stockholder approval. The transaction is expected to close in the
fourth quarter of 2017, subject to Hart-Scott-Rodino clearance and
customary conditions.
Immediately prior to entering into the definitive merger
agreement with United Rentals, Neff terminated its previously
announced merger agreement with H&E Equipment Services, Inc. In
connection with this termination, United Rentals has paid H&E a
termination fee of approximately $13.2 million on behalf of
Neff.
The company plans to update its 2017 financial outlook to
reflect the combined operations upon completion of the
transaction.
Strong Strategic Rationale
- Neff’s branch footprint and
complementary fleet mix will add efficiencies of scale in key
market areas, particularly fast-growing southern geographies.
- Neff’s established presence in the
infrastructure sector dovetails with the company’s Project XL
vertical growth initiatives, and is expected to lead to attractive
revenue synergies through the cross-selling of United Rentals’
broader fleet, including its specialty offerings.
- The combined operations will benefit
from the expansion of earthmoving as a component of United Rentals’
fleet mix, as well as Neff’s best-in-class expertise in managing
large earthmoving categories.
- Neff shares many cultural similarities
with United Rentals, including a customer-first business philosophy
and a strong focus on safety.
- As part of the United Rentals family,
Neff employees will bring a wealth of experience to the combined
organization. They will benefit from industry-leading technology,
training, safety programs and other resources, and have greater
opportunities for career development within the larger
company.
Robust Financial Drivers
- The company expects to realize
significant cost synergies in operational efficiencies and
corporate overhead, with a targeted adjusted EBITDA impact of
approximately $35 million by the end of year two.
- The company expects to realize
approximately $220 million in net present value of tax benefits
included in the $1.3 billion purchase price.
- Net of synergies, the purchase price
represents a multiple of 5.4 times adjusted EBITDA for the year
ended December 31, 2017, and an adjusted purchase multiple of 4.5
times, including the net present value of acquired tax
benefits.
- The acquisition is expected to be
immediately accretive to cash earnings per share and to free cash
flow generation.
- Return on invested capital is expected
to exceed the cost of capital within 18 months of closing, with an
attractive IRR and NPV.
- The company expects to maintain a pro
forma leverage ratio of under 3 times, with a strong deleveraging
path post-close.
- The transaction is not conditioned on
financing. United Rentals expects to use a combination of cash,
existing capacity under its ABL facility, and newly issued debt to
fund the transaction and related expenses.
CEO Comments
Michael Kneeland, president and chief executive officer of
United Rentals, said, “The acquisition of Neff is a significant
opportunity for us to augment long-term returns for our investors,
and build value for our customers and employees. We expect this
transaction to be accretive to both our financial performance and
customer-facing operations, with an important cross-selling
component. The strategic rationale passed every litmus test with
flying colors.”
Kneeland continued, “With the successful integration of NES
largely behind us, we’re prepared to move forward with another
smooth transition in our landmark 20th year. We’re excited to
realize the opportunities of this combination and leverage the many
areas where we’re stronger together. Neff has a customer-focused
team with seasoned field operators, a rigorous commitment to
safety, and specialized expertise. We look forward to welcoming
them as an important part of our future.”
Graham Hood, chief executive officer of Neff, commented, “United
Rentals is an industry leader in equipment rentals, and as a result
of this transaction, our employees and customers will benefit from
the combined company’s expanded geographic footprint and
diversified offering. We look forward to working with the United
Rentals management team as we bring these companies together and
leverage the compatible strengths of both businesses.”
Key Acquisition and Transaction Statistics (financial
information in millions)
Purchase Price $ 1,317 Present Value of
Acquired Tax Assets $ 220 Total Revenues (2017E) $ 419 Adjusted
EBITDA (2017E) $ 207 Estimated Annualized Cost Synergies Achieved
by End of Year Two $ 35 Estimated Annualized Cross-selling Benefits
Achieved by End of Year Three $ 15 Original Equipment Cost of Fleet
$ 867 Employees
~1,170
Rental Branches
69
Customers
~15,500
Morgan Stanley & Co. LLC and Centerview Partners acted as
financial advisors to United Rentals, and Sullivan & Cromwell
LLP acted as the company’s legal advisor. Deutsche Bank acted as
financial advisor to Neff Corporation, and Akin Gump Strauss Hauer
& Feld LLP acted as Neff’s legal advisor.
Presentation and Conference Call / Webcast
United Rentals will hold a conference call tomorrow, Thursday,
August 17, 2017, at 8:30 a.m. Eastern Time. The conference call
number is 855-458-4217 (international: 574-990-3605). The
conference call will also be available live by audio webcast at
unitedrentals.com, where it will be archived for 30 days. The
replay number for the call is 404-537-3406, passcode is
72555593.
Non-GAAP Measures
Adjusted 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. A
reconciliation between Neff’s expected net income and Adjusted
EBITDA, as well as other financial data, is provided in the
investor presentation available on the company’s website.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in
the world. The company has an integrated network of 960 rental
locations in 49 states and every Canadian province. The company’s
approximately 13,700 employees serve construction and industrial
customers, utilities, municipalities, homeowners and others. The
company offers approximately 3,300 classes of equipment for rent
with a total original cost of $10.3 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 Neff Corporation
Neff is a leading regional equipment rental company in the
United States, focused on the fast growing Sunbelt States. Based in
Miami, FL, the company offers a broad array of equipment rental
solutions for its more than 15,000 customers, focusing on key end
user markets including infrastructure, non-residential
construction, energy and municipal and residential construction.
Neff has 69 branches, approximately 1,160 employees and a broad
fleet of equipment, including earthmoving, material handling,
aerial and other rental equipment to meet specific customer
needs.
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 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,”
“2017E” (to denote 2017 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 and Neff, 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 Neff, including, without
limitation, problems associated with the potential loss of any key
employees of Neff; (4) the proposed transaction may involve
unexpected costs, including, without limitation, the exposure to
any unrecorded liabilities or unidentified issues that we fail to
discover during the due diligence investigation of Neff which will
not be subject to indemnification or reimbursement by Neff, as well
as potential unfavorable accounting treatment and unexpected
increases in taxes; (5) our businesses 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 business; 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 and Neff. United Rentals and Neff give no
assurance that they will achieve their expectations and do 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 and Neff
described in the “Risk Factors” section of their respective 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 and Neff, as applicable, on the date
hereof; and United Rentals and Neff assume no obligations to update
or revise any such forward-looking statements.
Additional Information and Where to Find It
In connection with the proposed acquisition, Neff intends to
prepare an information statement in preliminary and definitive form
for its stockholders containing the information with respect to the
proposed merger specified in Schedule 14C promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and describing the proposed merger. Neff’s stockholders are urged
to carefully read the information statement regarding the proposed
merger and any other relevant documents in their entirety when they
become available because they will contain important information
about the proposed acquisition. You may obtain copies of all
documents filed with the SEC regarding the proposed merger, free of
charge, at the SEC’s website, http://www.sec.gov, or on the
Investor Relations section of Neff’s website (www.neffrental.com),
or by directing a request to Neff by mail or telephone as set forth
above. Investors are also urged to read the current report on Form
8-K to be filed by Neff regarding the proposed merger, which will
also contain important information.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170816006130/en/
United Rentals, Inc.Ted Grace, 203-618-7122Cell:
203-399-8951tgrace@ur.comorNeff CorporationMark IrionChief
Financial OfficerorBrian CoolidgeDirector of Financial
Reporting305-513-3350InvestorRelations@neffcorp.com
United Rentals (NYSE:URI)
Historical Stock Chart
From Mar 2024 to Apr 2024
United Rentals (NYSE:URI)
Historical Stock Chart
From Apr 2023 to Apr 2024