United Rentals is acquiring NES Rentals for $965 million in cash, the companies announced today. The United Rentals board of directors and Diamond Castle Holdings LLC, the majority owner of NES, unanimously approved the agreement. The transaction is expected to close early in the second quarter of 2017, subject to Hart-Scott-Rodino clearance and customary conditions.
NES is one of the 10 largest independent aerial work platform rental companies in the U.S. On the 2016 Access, Lift & Handlers’ Aerials20 toplist, the company had 15,000 aerials in its fleet, while United's aerial fleet consists of 122,331 units.
This is the largest acquisition United has made of an independent rental company since its purchase of RSC Holdings Inc. in 2012 at a value of $4.2 billion.
Michael Kneeland, president and chief executive officer of United Rentals, said, “The NES agreement satisfies the rigorous strategic, financial and cultural standards we set for acquisitions. 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.”
Kneeland continued, “In NES, we’re acquiring a well-run operation that’s primed to benefit from our technology, infrastructure and cross-selling capabilities. Most importantly, we’re gaining a great team that shares our intense focus on safety and customer service. We’ll be working side by side throughout the integration to capitalize on best-in-class expertise from both sides. We look forward to welcoming the NES team to United Rentals.”
Based in Chicago, NES has 73 branches and approximately 1,100 employees. In 2016, NES generated an estimated $155 million of EBITDA at a 42.1 percent margin on $369 million of total revenue. As of December 31, 2016, NES had approximately $900 million of fleet at original equipment cost.
United Rentals plans to update its 2017 financial outlook to reflect the combined operations upon completion of the transaction.
United said the addition of NES’s branch footprint will increase its density in strategically important markets, including the East Coast, Gulf States and the Midwest.
According to a United Rentals’ statement, the acquisition is expected to be immediately accretive to United Rentals’ adjusted earnings per share and free cash flow generation for the full year 2017, and United Rentals expects to maintain a leverage ratio of less than 3.0. Return on invested capital is expected to exceed the cost of capital within 18 months of closing.