United Rentals to buy Ahern Rentals for $2 billion

(Reuters) United Rentals Inc said 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 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.

Founded in 1953, Ahern Rentals is the eighth largest equipment rental company in North America, with approximately 2,100 employees and 106 locations in 30 states serving approximately 44,000 customers in the construction and industrial sectors. For the trailing 12 months ended Sept. 30, 2022, Ahern Rentals generated $310 million of adjusted earnings before interest, tax, depreciation and amortization (EBITDA) on $887 million of total revenue. 

“Our acquisition of Ahern Rentals supports our strategy to deploy capital to grow the core business and drive shareholder value. We view ourselves as the ideal owner of these assets within our network, as customers will benefit from the combination of the two organizations moving forward together. We’re leveraging our competencies in larger-scale M&A [mergers and acquisitions] to augment both our near- and long-term earnings power,” said Matt Flannery, United Rentals CEO.

“Our integration playbook is underway so we can prepare the acquired branches to take full advantage of our systems and operational capabilities, and gain from our employee and customer-centric culture. I look forward to welcoming our new team members upon the closing of the acquisition,” Flannery said.

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