United Rentals to buy Ahern Rentals
By Murray Pollok14 November 2022
United Rentals is to buy Ahern Rentals for US$2 billion, adding annual revenues of around $890 million and 106 locations in the US. The deal will combine the country’s largest and the eighth largest equipment rental businesses.
The transaction, which is expected to close before the end of the year, will bolster United’s footprint on both US coasts and in the Gulf region and strengthen its aerial platform and telehandler fleets, which represent 75% of Ahern’s equipment by original value.
United will fund the deal through a combination of new debt and existing asset backed loans. The $2 billion price equates to 6.5 times Ahern’s adjusted EBITDA for the 12 months ended 30 September.
Ahern Rentals is based in Las Vegas and was founded in 1953 by John Ahern, father of current CEO Don Ahern. It began to focus on equipment rentals in 1958 and grew into one of the 20 largest rental businesses in the world and a top 10 operator in North America.
It is part of the Ahern Family of Companies owned by Don Ahern. Sister companies include aerial platform manufacturer Snorkel (which is 49% owned by Tanfield Group) and telehandler specialist Xtreme Manufacturing.
Matthew Flannery, CEO of United Rentals, said, “We view ourselves as the ideal owner of these assets within our network, as customers will benefit from the combination of the two organisations moving forward together. We’re leveraging our competencies in larger-scale M&A to augment both our near- and long-term earnings power.”
Flannery said United’s “integration playbook” was now underway.
Don Ahern, Ahern’s CEO, said he was proud of the business that had been built over seven decades; “and I’m extremely pleased that the combination with United Rentals will take the business forward in this next chapter of growth.
“I want to thank our employees for driving the results that make this transaction possible. This is a strong outcome for both organisations and our customers.”
Ahern employs 2,100 employees people in 30 states serving approximately 44,000 customers. It has a rental fleet valued at $1.85 billion (original cost). The current value of acquired assets is $426 million.
United said it would target $40 million annual cost savings through synergies within the first 12 to 18 months, with $60 million savings by the third year of ownership. In particular it identifies an opportunity to cross-sell its specialty rental services (such as power and pumps) through Ahern’s general rentals locations.
The deal leaves Ahern Group to focus on its equipment businesses - Snorkel and Xtreme - as well as its numerous sales subsidiaries and training and engineering companies.
For Don Ahern, it means an end to his lifelong direct engagement in equipment rentals, although he remains embedded in the industry as a supplier through the Snorkel and Xtreme businesses.
Ahern Rentals has been a high-profile rental business for decades. It survived a difficult period under Chapter 11 proceedings following the global financial crisis, but successfully exited that process in June 2013 and went on to capitalise on the rapid growth in rental in the country.
The deal cements United Rentals’ position as the world’s largest equipment rental business and also the number one in North America, with a market share in the 15% to 20% range. It reported revenues of more than US$9.7 billion in 2021. Next largest is Sunbelt Rentals, owned by Ashtead Group, with North American revenues in excess of $7 billion.
According to data provided by United, Ahern Rentals’ customer mix was highly geared towards non-residential construction, representing 62% of revenues, followed by business services (8%), residential construction (8%) and manufacturing (6%). Power and other sectors made up the 15% balance.
Ahern’s depot network is spread quite evenly across the US, although half of its locations are in five states, led by California (15 depots), Texas (14), Nevada (11), Florida (9) and Arizona (5).