Jockeying continues among rental equipment firms
By Industrial Distribution Staff -- Industrial Distribution, 7/1/1999
Newton, Mass.--In what may amount to just a hiccup in the fast-consolidating construction products channel, NationsRent and Rental Service Corp. canceled their proposed merger in May. Announcing the termination of the deal, NationsRent CEO James Kirk said the proposed terms were insufficient and the merger would have restricted the firm's ability to grow internally and through acquisitions."With the termination of this agreement, we will be able to move forward with our backlog of letters of intent and a definitive agreement to acquire seven equipment rental companies with 25 locations representing approximately $125 million of annual revenue," Kirk said in a prepared statement. At press time, none of those acquisitions had been completed but company spokesman Larry Larsen said NationsRent would continue its focus on heavy equipment distributors.
"We're always looking for more [distribution] companies for acquisitions," Larsen said. "I think you'll start to see us roll out more products as well as expand with national branding and a cluster strategy."
The merger was opposed by rental giant United Rentals, Inc., which made its own offer for Rental Service and went to court last spring to block the NationsRent bid. United Rentals had offered to buy Rental Service for $22.75 a share in cash and assume $810 million in debt for a total price tag of $1.36 billion.
Rental Service, which NationsRent said would make a $6 million payment as a result of terminating the merger, did not comment on the deal's failure.
In other moves, Raytheon Co. in June announced the sale of its equipment rental subsidiary, ARAYCO Inc., to United Rentals for $54 million in cash. ARAYCO Inc. operates from five sites in the U.S. and has about 70 employees. United Rentals is the largest equipment rental company in North America with 506 locations.
Hertz Equipment Rental Corp. also stepped up its expansion pace by opening five new branches and acquiring companies with four facilities, for a total of more than 230 North American locations.
New facilities opened in Sugar Hill, Ga., Deer Park, Texas, Clarksville, Tenn., and S. Portland and Hillsboro, Oreg. Hertz also acquired Outfitter, which has one location in Texas, and A-1 Rent-All Center.
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