19.04.2021

United’s $1 billion acquisition

US based United Rentals is to acquire publicly quoted cabin/modular building rental company General Finance Corporation for $19 per share in cash, valuing the business at around $996 million including the assumption of $400 million of net debt.

General Finance trades in North America as Pac-Van and Container King with 58 branches, while in Australasia it trades as Royal Wolf with 25 branches in Australia and 13 in New Zealand. It is a leading provider of mobile storage, cabin and modular office space, running a fleet of 100,000 units with an original cost of $639 million and 930 employees.
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Its customer base covers a wide range of end users from construction, commercial, industrial, retail, petrochemical to education. The company had revenues in the calendar year of 2020 of $346 million, with a pre-tax profit of $9 million. This was significantly down on the prior year, with all of the profit made in the second half.

United will commence a tender offer on or before April 26th to acquire all of the outstanding shares for $19 a share in cash. The transaction is expected to close by mid year.

United expects to gain significant cross selling opportunities among General Finance’s 50,000 strong customer base, while gaining a strong position in the Australian and New Zealand modular space rental market. It is targeting $65 million of revenue synergies in the first three years while gaining up to $17 million of EBITDA by the end of year two through cost saving synergies achieved through the integration and reductions in corporate overhead.

Chief executive Matthew Flannery said: “Our acquisition of General Finance will be a significant opportunity for us to further differentiate our value in the eyes of our customers, while providing attractive, long term returns for our shareholders. We see strong growth potential from this combination, including our ability to cross sell mobile storage and office solutions to our customers. Our expansion into this space comfortably checks all three boxes of our M&A criteria — strategic rationale, financial impact and cultural fit.”

“We are confident the time is right to reengage in mergers and acquisitions with this highly strategic combination, as our end markets recover from the challenges of 2020. General Finance is a customer focused organisation with excellent field operators and specialized expertise that complements our own. We look forward to welcoming our new employees and customers as an important part of our future.”

General Finance chief executive, Jody Miller, added: “Our combination with United Rentals — the industry leader in equipment rentals — is a strong outcome for everyone involved. Our customers will benefit from United’s extensive solutions and geographic footprint, and our employees will have new opportunities as part of the largest rental team in the world.”