STAMFORD, CT — United Rentals and BakerCorp International Holdings announced Monday that it has entered into a definitive agreement under which United Rentals will acquire BakerCorp for approximately $715 million in cash. The boards of directors of United Rentals and BakerCorp have unanimously approved the agreement. The transaction is expected to close in the third quarter of 2018.
BakerCorp is a multinational provider of tank, pump, filtration and trench shoring rental solutions for a broad range of industrial and construction applications. The company has approximately 950 employees serving more than 4,800 customers in North America and Europe. BakerCorp’s operations are primarily concentrated in the United States and Canada, where it has 46 locations, with another 11 locations in France, Germany, the UK and the Netherlands. For the trailing 12 months ended May 31, 2018, BakerCorp generated $79 million of adjusted EBITDA at a 26.9 percent margin on $295 million of total revenue.
The company plans to update its 2018 financial outlook to reflect the combined operations after the transaction is complete.
Strong Strategic Rationale
- BakerCorp’s 75-plus years in business have created strong, blue-chip customer relationships in the industrial and construction sectors. The combined company will serve a larger strategic account base with a broader fleet range, including approximately 24,000 units to be acquired at closing. The combination is expected to create significant opportunities for revenue growth and customer service through cross-selling, re-rent conversion and scale.
- The combination of BakerCorp’s comprehensive solutions across fluid storage, transfer and treatment with United Rentals’ Pump Solutions unit will create an enhanced value proposition for customers across the broader fluid solutions space, with market-leading revenue of approximately $606 million (pro forma trailing 12 months).
- The integration of BakerCorp into United Rentals will give the acquired locations access to United Rentals’ systems and technology, as well as process and data-driven efficiencies. The combined operations are expected to create approximately $19 million in direct cost synergies across corporate overhead and shared services.
- BakerCorp’s international operations, which accounted for approximately 15 percent of total revenue for their fiscal year ended January 31, 2018, provide an attractive entry into select European markets for the rental of fluid solutions.
- United Rentals and BakerCorp share many cultural attributes, including exemplary safety records, highly engaged employees, deep industry expertise and a commitment to help customers succeed through cost-efficient, productive solutions.
- United Rentals will acquire BakerCorp for a purchase price of approximately $715 million in cash. This represents a multiple of 9.0x adjusted EBITDA for the trailing 12-month period ended May 31, 2018, and an adjusted purchase multiple of 6.6x, including tax benefits and cost synergies.
- The acquisition is expected to be accretive to adjusted earnings per share with an attractive internal rate of return and run-rate ROIC exceeding cost of capital within 36 months after closing. The company expects its net leverage ratio to be approximately 2.5x at year-end 2018 and remains committed to executing its recently announced $1.25 billion share repurchase authorization.
- 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.
"We’re very pleased to announce an agreement to acquire BakerCorp, an expert in fluid solutions and a highly regarded, customer-focused operation," said Michael Kneeland, CEO of United Rentals. "We’re gaining a terrific team that shares our strong commitment to safety and customer service, and operations that complement our North American pump and trench offerings. This transaction will also be our company’s first experience in Europe, where BakerCorp has established an attractive, fast-growing business with significant future opportunity. We set a high bar across strategic, financial and cultural metrics when evaluating any acquisition. BakerCorp met every test, with the additional advantage of being primed to benefit from our systems and technology. We expect the combination to augment our revenue, earnings and EBITDA in 2018, while propelling the growth of one of our most promising specialty segments."
"I’m extremely proud of what our team has built," BakerCorp president and CEO Bob Craycraft added. "The value we’ve delivered for our customers has created this new opportunity to be part of the largest equipment rental company in the world. The combination with United Rentals is an exciting development for the future of both our customers and employees."
William Plummer to Retire as Chief Financial Officer of United Rentals
Also on Monday, United Rentals announced that William Plummer will retire as executive vice president and chief financial officer on Oct. 12. Plummer is the company’s longest-serving CFO, having joined United Rentals in 2008. He will remain with United Rentals until January 31, 2019, in an advisory capacity.
The United Rentals board of directors has appointed Jessica Graziano as chief financial officer, effective Oct. 12. Graziano joined United Rentals in December 2014 as controller and principal accounting officer and was promoted to her current role in March 2017. In this role, she works closely with the senior leadership team and oversees the company’s accounting, financial planning and analysis and insurance departments. Graziano has more than two decades of financial management experience, previously serving as senior vice president, principal financial officer, chief accounting officer and corporate controller for Revlon Inc. Earlier, she held senior financial positions with UST Inc. (now Altria Group), Sturm, Ruger & Company Inc. and KPMG LLP.
"We deeply appreciate Bill’s extraordinary contributions to United Rentals over the last decade and the strong leadership he has provided," Kneeland said. "He will remain available to the executive team in an advisory capacity. On a personal note, I want to thank Bill for being an incredible partner in transforming our company and serving our shareholders. We all wish him the very best in his retirement from the company."
During his tenure at United Rentals, Mr. Plummer brought his significant expertise to bear on behalf of the business. He has been instrumental in helping the company execute a strategy of strong organic growth and acquisitions, strengthening the company’s capital structure, and improving profitability and free cash flow that, combined, have created substantial shareholder value.
"It has been a privilege to provide financial leadership to United Rentals during a pivotal 10 years of growth," Plummer said. "While I’m incredibly proud of the results we produced, I’m even more proud of the team that delivered those results, and I know they will continue to do so. Jessica and I have worked closely together for more than three years, and I’ve seen her strengths firsthand. I’m stepping down with the knowledge that, under her leadership, the company will continue its focus on balancing growth and returns.”
Plummer’s experience prior to United Rentals included positions as chief financial officer of Dow Jones & Company and treasurer of Alcoa, Inc. He is the recipient of numerous awards, including recognition as one of America’s Best CFOs by Institutional Investor magazine, and one of the 100 Most Powerful Executives in Corporate America by Black Enterprise magazine. He serves on the boards of directors of John Wiley & Sons, Inc. and Global Payments, Inc.