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United Rentals to buy Ahern Rentals for $2 billion as tools demand jumps

Published 11/14/2022, 06:17 AM
Updated 11/14/2022, 11:21 AM
© Reuters.
URI
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By Nathan Gomes and Priyamvada C

(Reuters) - United Rentals Inc (NYSE:URI) said on Monday it would acquire the assets of smaller rival Ahern Rentals Inc for about $2 billion in cash, as the equipment rental firm looks to expand its U.S. presence.

The deal will help United better capitalize on rising demand from manufacturers and construction companies as they ramp up output amid a post-pandemic rebound in industrial activity.

This is the latest in a string of acquisitions by the Stamford, Connecticut-based company over the past few years.

"URI (United Rentals Inc) has a track record of meaningfully improving margins in acquired general rental businesses," said Goldman Sachs (NYSE:GS) analyst Jerry Revich.

United, which said it can get more productivity out of Ahern's fleet, expects the deal to generate about $40 million of annualized cost synergies within the first 12 to 18 months of closing.

The deal is estimated to close before the end of this year.

United, whose shares rose more than 1% in morning trade, rents out industrial equipment such as vertical lifts, portable generators and mini-excavators.

It expects to fund the deal with a mix of newly issued debt and existing capacity under its Asset-Based Loan (ABL) facility.

© Reuters. The sign outside of the United Rentals store in Denver, Colorado July 19, 2017.  REUTERS/Rick Wilking

Ahern was founded in 1953 and is a family-owned equipment rental firm with about 2,100 employees. It operates across 106 locations in 30 U.S. states, with a rental fleet that consists of aerial lifts.

Sullivan & Cromwell LLP acted as legal advisor to United.

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