25.10.2018

United acquires WesternOne

US based United Rentals has acquired the assets of Canada’s WesternOne Rentals & Sales for $91.8 million in cash.

The deal done through United’s wholly owned Canadian subsidiary - United Rentals of Canada - is expected to close before the year end, but is subject to Western one’s shareholder approval, but is not contingent on financing.

WesternOne is major regional Canadian rental company with 12 branches in in 10 towns in Western Canada (Calgary, Edmonton, Fort McMurray, Lethbridge and Red Deer in Alberta. Burnaby, Saanichton, Terrace and Victoria in British Columbia and Winnipeg in Manitoba), with a focus on aerial lifts, telehandlers, heating equipment and temporary power, it also focuses on the film and media industry, along with shipyards, it has around 330 employees and revenues this year are expected to be in the C$100 million ($77 million) range with either a small pre-tax loss or roughly break even.
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WesternOne runs a large aerial lift fleet, ranging from boom lifts to underbridge inspection platforms

United chief executive Michael Kneeland said: “The acquisition of WesternOne Rentals & Sales will expand both our general rental and specialty offerings in key Canadian provinces. WesternOne’s aerial and portable heat rentals dovetail with our own range for construction and industrial customers. We’ll also gain scale and diversification in two areas: the sports and entertainment vertical, with a focus on film and television production, and a comprehensive propane and diesel fuel service.”

“In addition, the combination directly aligns with our vision for customer service. We particularly like the fact that WesternOne’s culture focuses on people and innovation. In addition to cross-selling our equipment and services, we’ll be able to give our combined customer base the benefit of new expertise and a larger pool of shared technology. We look forward to welcoming WesternOne employees to United Rentals.”

Vertikal Comment

WesternOne is publicly quoted and had run into serious problems in 2016, since when it has been steadily pulling itself back towards profitability and appeared to have turned the quarter with rising revenues over the past 18 months and smaller losses. However its asset base was shrinking, probably due to an aging equipment fleet, and it would have struggled to have either rejuvenate the fleet or survive any new downturn.

While the company has always declared itself to be “proudly Canadian” the acquisition by United is almost certainly a good move for the shareholders and possibly employees too, although there are likely to be some layoffs as the business in integrated into United’s Canadian network which has considerable overlap with WesternOne's depot network.

Compared to United’s acquisitions of the past couple of years or so, this is a small ‘bolt on’ deal, with the company paying a relatively modest premium on the net book value of the assets. So it looks as though the main rationale for the move, is to add depreciated equipment, some new customers and an experienced work force, while taking out a competitor.

Good news for other rental companies in the region.