United Rentals, Inc. (NYSE: URI) (“United Rentals”) and RSC
Holdings, Inc. (NYSE: RRR) (“RSC”) today announced that they have
entered into a definitive merger agreement under which United
Rentals will acquire RSC in a cash-and-stock transaction valued at
$18.00 per share, or a total enterprise value of $4.2 billion,
including $2.3 billion of net debt. The Boards of Directors of both
companies have unanimously approved the proposed transaction and
recommended that their respective stockholders approve the proposed
transaction.
The proposed transaction will create a leading North American
equipment rental company with a more attractive business mix,
greater scale and enhanced growth prospects. The combination is
also expected to accelerate United Rentals’ growth with industrial
customers as well as provide a lower cost base and a less volatile
revenue profile to better position the company through all phases
of the business cycle. The new United Rentals is well-positioned to
benefit from increased rental penetration, the continued strength
of the industrial sector, serving customers across a variety of
industries and a recovery in construction activity. United Rentals
and RSC have already begun working on a plan to facilitate a smooth
integration of the businesses and realization of over $200 million
of potential cost savings.
Michael Kneeland, President and Chief Executive Officer of
United Rentals said, “This transaction marks a transformative
moment in our company’s history. Combining the experience and
resources of two top performing equipment rental companies creates
an exceptional company. The new United Rentals will build upon the
best practices and management teams from both companies to deliver
superior customer benefits and enhanced value for our stockholders.
With the best talent in the industry, we have a tremendous
opportunity to become the supplier of choice for customers
throughout North America.”
Erik Olsson, RSC’s Chief Executive Officer and President, said,
“RSC has a strong track record of profitable growth and we are
proud of what we have built. At the same time, I am confident that
by partnering with United Rentals we can accomplish far more than
either company could have achieved on its own, including
significant synergies. As a result, the transaction delivers
significant value to our shareholders. Our similar customer-centric
cultures and commitment to operational excellence will provide even
greater value to our customers and facilitate a smooth integration.
I look forward to helping to lead the integration process during a
transition period.”
Upon the close of the transaction, three of RSC’s independent
directors will receive seats on United Rentals’ existing Board of
Directors.
Michael Kneeland, President and Chief Executive Officer of
United Rentals, and Jenne Britell, United Rentals’ Chairman, will
remain in their positions at the combined company.
Transaction Highlights
Upon the closing of the transaction, each outstanding share of
RSC common stock will be converted into the right to receive $10.80
in cash and 0.2783 of a share of United Rentals common stock,
subject to the terms and conditions of the merger agreement.
The transaction provides immediate value to RSC stockholders
through the cash component, as well as continued participation in
future value creation of United Rentals through their ownership of
approximately 30% percent of United Rentals on a fully diluted
basis. The price of $18.00 per share represents a 58% premium over
RSC’s closing price as of December 15, 2011.
The cash portion of the transaction will be financed through new
debt issuance and drawing on current loan facilities. United
Rentals has obtained financing commitments from Morgan Stanley
Senior Funding Inc., Bank of America Merrill Lynch and Wells Fargo
in support of this transaction. By the end of 2012, the combined
company’s leverage ratio is expected to be in line with United
Rentals’ previously stated target range of 3.5x – 4.5x. As a
result, United Rentals expects to retain its current corporate
credit ratings. United Rentals intends to re-pay the outstanding
amounts on RSC’s existing Senior Secured Credit Facilities and
Senior Secured Notes due 2017, and assume all of RSC’s existing
unsecured debt.
United Rentals’ Board also announced its intention to authorize
after closing a stock buyback of up to $200 million of the
Company’s common stock. United Rentals’ current intention is to
complete the stock buyback within six to twelve months after
closing.
The deal is expected to be accretive to United Rentals’ cash
earnings per share in the first full year after closing. The
transaction is anticipated to provide over $200 million of annual
cost savings through the elimination of redundant infrastructure,
branches and overhead, two thirds of which are expected to be
achievable within the first twelve months following the closing of
the transaction. The combination is also expected to provide
meaningful revenue synergies from the expanded footprint, in
particular with national and industrial account relationships and
provide additional cash flow upside through optimization of the
combined fleet and capital expenditures.
The proposed transaction is subject to the conditions of
delivery of tax opinions and a solvency opinion as well as
customary closing conditions, including approval by United Rentals
and RSC stockholders, absence of a United Rentals and RSC material
adverse effect and notification and clearance under certain
antitrust statutes. United Rentals and RSC expect the transaction
to close in the first half of 2012.
Oak Hill Capital Partners has agreed to vote its 33.5%
shareholding in RSC in favor of the transaction.
Special meetings of the United Rentals’ and RSC’s respective
stockholders will be held as soon as practicable after the
preparation and mailing of the joint proxy statement/prospectus to
be included in the registration statement on Form S-4 to be filed
by United Rentals to register the shares of United Rentals common
stock issuable in connection with the proposed transaction with the
Securities and Exchange Commission and the subsequent mailing to
United Rentals’ and RSC’s respective stockholders. The joint proxy
statement/prospectus is expected to be mailed as promptly as
practicable after the effectiveness of this registration
statement.
Centerview Partners and Morgan Stanley & Co. LLC acted as
financial advisors to United Rentals, and Sullivan & Cromwell
LLP acted as the Company's legal advisor. Barclays Capital and
Goldman, Sachs & Co. were lead financial advisors to RSC, and
Deutsche Bank also provided financial advice. Paul, Weiss, Rifkind,
Wharton & Garrison LLP and Debevoise & Plimpton LLP acted
as RSC’s legal advisors.
Conference Call / Webcast
United Rentals and RSC will hold an analyst and investor
conference call/webcast today, Friday, December 16, at 8:00 a.m. ET
to discuss the proposed acquisition. The webcast can be accessed on
the investor relations sections on the two companies’ websites
http://www.ur.com/investor and http://investor.rscrental.com. You
can also listen to the conference call by dialing either (888)
874-9470 in the United States or (973) 935-8772 outside of the
United States. Please reference conference ID 36465372.
A replay of the call will be available within 24 hours.
About United Rentals
United Rentals, Inc. (“United Rentals”) is the largest equipment
rental company in the world, with an integrated network of 541
rental locations in 48 states and 10 Canadian provinces. The
company's approximately 7,500 employees serve construction and
industrial customers, utilities, municipalities, homeowners and
others. The company offers for rent approximately 2,900 classes of
equipment with a total original cost of $4.26 billion. United
Rentals is a member of the Standard & Poor's MidCap 400 Index
and the Russell 2000 Index® and is headquartered in Greenwich,
Conn. Additional information about United Rentals is available at
www.unitedrentals.com.
About RSC Holdings
RSC Holdings Inc. (NYSE: RRR) (“RSC Holdings”) based in
Scottsdale, Arizona, is the holding company for the operating
entity RSC Equipment Rental, Inc. (“RSC”), which is a premier
provider of rental equipment in North America, servicing the
industrial, maintenance and non-residential construction markets
with $2.7 billion of equipment at original cost. RSC offers
superior equipment availability, reliability and 24x7 service to
customers through an integrated network of 452 branch locations
across 42 states in the United States and three provinces in
Western Canada. Customer solutions to improve efficiency and reduce
cost include the proprietary Total Control® rental management
software, Mobile Tool Rooms™ and on-site rental locations. With
over 4,600 employees committed to safety and sustainability, RSC
delivers the best value and industry leading customer service. All
information is as of September 30, 2011. Additional information
about RSC is available at www.RSCrental.com.
Cautionary Statement Regarding Forward-Looking
Statements
This document contains “forward-looking” statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and in the Private Securities Litigation Reform Act of
1995, known as the PSLRA. These statements, as they relate to
United Rentals or RSC Holdings, the management of either such
company or the transaction, involve 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 can be guaranteed,
and actual results may differ materially from those projected.
United Rentals and RSC Holdings undertake 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” 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
documents United Rentals and RSC Holdings have filed with the U.S.
Securities and Exchange Commission as well as the possibility that
(1) United Rentals and RSC Holdings may be unable to obtain
stockholder or regulatory approvals required for the proposed
transaction or may be required to accept conditions that could
reduce the anticipated benefits of the merger 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 RSC Holdings; (4) the proposed transaction
may involve unexpected costs; (5) the businesses may suffer as a
result of uncertainty surrounding the proposed transaction; 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 Securities and Exchange Commission by United
Rentals and RSC Holdings. United Rentals and RSC Holdings give 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 and RSC
Holdings 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
Securities and Exchange Commission. All forward-looking statements
included in this document are based upon information available to
United Rentals and RSC Holdings on the date hereof; and United
Rentals and RSC Holdings assumes no obligations to update or revise
any such forward-looking statements.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This press release relates to a proposed transaction between
United Rentals and RSC Holdings, which will become the subject of a
registration statement and joint proxy statement/prospectus forming
a part thereof to be filed with the SEC by United Rentals. This
press release is not a substitute for the registration statement
and joint proxy statement/prospectus that United Rentals will file
with the SEC or any other documents that they may file with the SEC
or send to shareholders in connection with the proposed
transaction. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
JOINT PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS
FILED OR THAT WILL BE FILED WITH THE SEC IN CONNECTION WITH THE
PROPOSED TRANSACTION AS THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
You will be able to obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing
information about United Rentals and RSC Holdings, at the SEC’s
Internet site (http://www.sec.gov). You will also be able to obtain
these documents, free of charge, in the Investor Relations portion
of the United Rentals website at http:// http://www.ur.com/investor
under the heading “Investors” and then under “SEC Filings.” Copies
of the joint proxy statement/prospectus and the SEC filings that
will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, free of charge, by
directing a request to Investor Relations at 203-618-7318.
Participants in Solicitation
United Rentals, RSC Holdings and their respective directors and
executive officers and certain members of management and employees
may be deemed to be participants in the solicitation of proxies
from the stockholders of United Rentals and RSC Holdings in
connection with the proposed transaction. Information about the
directors and executive officers of United Rentals and their
ownership of United Rentals common stock is set forth in the proxy
statement for the United Rentals 2011 annual meeting of
stockholders, as filed with the SEC on Schedule 14A on March 31,
2011. Information about the directors and executive officers of RSC
Holdings and their ownership of RSC Holdings common stock is set
forth in the proxy statement for the RSC Holdings’ 2011 annual
meeting of stockholders, as filed with the SEC on Schedule 14A on
March 16, 2011. Additional information regarding the interests of
those persons and other persons who may be deemed participants in
the proposed transaction may be obtained by reading the joint proxy
statement/prospectus regarding the proposed transaction when it
becomes available. You may obtain free copies of this document as
described in the preceding paragraph.
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