United Rentals To Buy Neff In $1.3 Bln Deal

(RTTNews) - United Rentals Inc. (URI) said that it agreed to buy Neff Corporation for $25 per share in cash, representing a total purchase price of approximately $1.3 billion. The transaction is expected to be immediately accretive to cash EPS and free cash flow.

For the full year 2017, Neff is expected to generate $207 million of adjusted EBITDA at a 49.5% margin on $419 million of total revenue. As of June 30, 2017, Neff had approximately $867 million of fleet based on original equipment cost.

Neff is one of the 10 largest U.S. equipment rental companies, with a presence in 14 states and a concentration in southern geographies. Based in Miami, Fla., Neff offers earthmoving, material handling, aerial and other equipment rental solutions to its more than 15,500 construction and industrial customers. Approximately 1,200 Neff employees and 69 branches serve end markets in the infrastructure, non-residential, energy, municipal and residential construction sectors.

The boards of directors of United Rentals and Neff unanimously approved the agreement. Private investment funds managed by Wayzata Investment Partners LLC, which hold approximately 62.7% of the outstanding common shares of Neff, have executed a written consent to approve the transaction, thereby providing the required stockholder approval.

The transaction is expected to close in the fourth quarter of 2017, subject to Hart-Scott-Rodino clearance and customary conditions.

The company plans to update its 2017 financial outlook to reflect the combined operations upon completion of the transaction.

The company expects to realize significant cost synergies in operational efficiencies and corporate overhead, with a targeted adjusted EBITDA impact of approximately $35 million by the end of year two.

Immediately prior to entering into the definitive merger agreement with United Rentals, Neff terminated its previously announced merger agreement with H&E Equipment Services, Inc. In connection with this termination, United Rentals has paid H&E a termination fee of approximately $13.2 million on behalf of Neff.