United Rentals to Acquire General Finance Corporation
United Rentals will acquire General Finance for $19 per share, totaling approximately $996 million, including $400 million net debt. The acquisition aims to enhance United Rentals' market presence and diversify service offerings in mobile storage and modular office space. General Finance operates 106 branches across North America and Australia/New Zealand, generating $94 million adjusted EBITDA on $346 million revenue. The deal, expected to close in Q2 2021, is projected to yield $65 million in revenue synergies and $17 million in adjusted EBITDA benefits by the second year post-acquisition.
- Acquisition expected to create $65 million in revenue synergies within three years.
- Estimated $17 million improvement in adjusted EBITDA from cost synergies by year two.
- Entry into Australian and New Zealand markets through General Finance's established platforms.
- Expected return on invested capital to exceed cost of capital within 18 months.
- None.
United Rentals, Inc. (NYSE: URI) (“United Rentals” or “the company”) and General Finance Corporation (NASDAQ: GFN) (“General Finance”) today announced their entry into a definitive agreement under which United Rentals will acquire General Finance for
General Finance, which operates as Pac-Van and Container King in the U.S. and Canada, and as Royal Wolf in Australia and New Zealand, is a leading provider of mobile storage and modular office space. Its network of 106 branches and over 900 employees serves diverse end markets, including construction, commercial, industrial, retail, transportation, petrochemical, consumer, natural resources, governmental and education.
As of December 31, 2020, on a trailing 12-month basis, General Finance generated
The boards of directors of United Rentals and General Finance unanimously approved the transaction, which is subject to customary closing conditions, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other regulatory approvals. United Rentals intends to commence a tender offer by April 26, 2021, to acquire all of the outstanding shares of GFN common stock for
Strong Strategic Rationale
- General Finance’s positioning as a leader in the North American sector for mobile storage and office solutions strongly complements United Rentals’ leading positions in general construction and industrial rentals and specialty rentals. This will further differentiate the company through its ability to deliver value as a one-stop-shop for customers.
- General Finance operates in 52 of the top 100 MSAs in North America served by United Rentals locations, which will create immediate cross-sell opportunities. Importantly, United Rentals will have the ability to introduce mobile storage and modular office solutions in its MSAs currently not served by General Finance.
- General Finance’s mobile storage and office business in Australia and New Zealand will give United Rentals entry into these geographies with an established platform run by a seasoned management team, and with a strong growth strategy already in place.
- General Finance shares many cultural similarities with United Rentals, including a customer-first business philosophy, long-term customer relationships across diverse end markets and a strong focus on safety.
- Approximately 900 General Finance employees will bring a wealth of experience to United Rentals in the combination. They will benefit from industry-leading technology, state-of-the-art training and safety programs and other resources, and have greater opportunities for career development within the larger company.
Robust Financial Drivers
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United Rentals sees significant potential upside to profitability from the transaction over the next several years, driven by synergies within the combined operations, complementary services, efficiencies of scale and an aggressive growth strategy. The company is targeting
$65 million of total revenue synergies in the first three years post-close.
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The company expects to realize a
$17 million benefit to adjusted EBITDA by the end of year two from cost synergies achieved through the integration, including operational efficiencies and a reduction in corporate overhead. This is equivalent to4.9% of General Finance’s trailing 12-months total revenue, and10.4% of the combined cost of leasing operations and selling and general expenses over the same period.
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The company expects to realize approximately
$19 million in net present value of tax benefits included in the$996 million purchase price.
- Net of synergies, the purchase price represents a multiple of 9.0 times trailing 12-month adjusted EBITDA, and an adjusted purchase multiple of 8.8 times, including the net present value of acquired tax benefits.
- Return on invested capital is expected to exceed the cost of capital within 18 months of closing on a run-rate basis, with an attractive IRR and NPV.
- The company expects to maintain an as-reported leverage ratio of less than 2.5 times net debt to EBITDA at closing, and a pro forma leverage ratio of less than 2.4 times at closing.
- The transaction is not conditioned on financing. United Rentals expects to use a combination of cash and existing capacity under its ABL facility to fund the transaction and related expenses.
CEO Comments
Matthew Flannery, president and chief executive officer of United Rentals, said, “Our acquisition of General Finance will be a significant opportunity for us to further differentiate our value in the eyes of our customers, while providing attractive, long-term returns for our shareholders. We see strong growth potential from this combination, including our ability cross-sell mobile storage and office solutions to our customers. Our expansion into this space comfortably checks all three boxes of our M&A criteria — strategic rationale, financial impact and cultural fit.”
Flannery continued, “We’re confident the time is right to reengage in M&A with this highly strategic combination, as our end markets recover from the challenges of 2020. General Finance is a customer-focused organization with excellent field operators and specialized expertise that complements our own. We look forward to welcoming our new employees and customers as an important part of our future.”
Jody Miller, chief executive officer of General Finance, commented, “Our combination with United Rentals — the industry leader in equipment rentals — is a strong outcome for everyone involved. Our customers will benefit from United’s extensive solutions and geographic footprint, and our employees will have new opportunities as part of the largest rental team in the world.”
Key Acquisition and Transaction Statistics
Financial information in $ millions
Purchase Price |
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