25 August 2017

United Rentals outbids H&E for Neff

United Rentals is acquiring Neff in a cash deal worth around USD 1,300 million. Under the terms, United Rentals is offering USD 25.00 per share, which is 26.9 per cent higher than the target’s close on 13th July 2017, the last trading day before the takeover was first reported.

Notable sellers include private equity firm Wayzata Investment Partners, which took over Neff’s assets after the target filed for bankruptcy in 2010.

Although the boards of United Rentals and Neff have given the green light, the merger between the two New York Stock Exchange-listed companies remains subject to approvals from the US Department of Justice and Federal Trade Commission.

United Rentals’s offer trumps the USD 1,200 million that rival suitor H&E Equipment Services is prepared to pay for the takeover of Neff. The Nasdaq-listed construction machinery provider decided not to revise its offer and subsequently pulled out of the deal.

Based in Miami, Florida, Neff claims to be one of the largest equipment rental firms in the US and has a broad fleet that includes excavators, bulldozers, trenchers and tractors. It operates 69 rental branches and has a significant presence in the Sun Belt states of the US. With about 1,200 employees, the group serves over 15,500 clients, which include building constructors, golf course developers, oil companies, industrial facilities and government agencies.

According to its press release, Neff had about USD 867 million-worth of equipment for rental as of 30th June 2017 and expects to yield USD 419 million in revenue and USD 207 million of adjusted earnings before interest, tax, depreciation and amortisation this year.

Billed as the world’s largest equipment lessor, United Rentals operates 960 rental outlets in 49 US states and in all ten provinces of Canada. It provides construction, aerial and industrial equipment via its General Rentals division, and leases tools for petrochemical and underground projects and heating, ventilation and air-conditioning works through its Trench, Power and Pump segment.

Commenting on the transaction, Neff’s chief executive Graham Hood said: “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.

As shown by Zephyr, the M&A database published by Bureau van Dijk, this is United Rental’s second largest announced investment on record, after its USD 4,200 million takeover of US-based industrial and commercial machinery lessor RSC Holdings, which completed in 2012. United Rental’s acquisition of Neff is also the sixth largest by value among all transactions targeting construction, mining, and forestry machinery and equipment lessors announced worldwide so far.

© Zephyr