United Rentals to acquire Neff for $25 per share
United Rentals (URI) and Neff Corporation (NEFF), operating as Neff Rental, announced that they have entered into a definitive agreement under which United Rentals will acquire Neff for $25 per share in cash, representing a total purchase price of approximately $1.3B.
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.
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.
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.
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. The company expects to realize approximately $220 million in net present value of tax benefits included in the $1.3 billion purchase price.
Net of synergies, the purchase price represents a multiple of 5.4 times adjusted EBITDA for the year ended December 31, 2017, and an adjusted purchase multiple of 4.5 times, including the net present value of acquired tax benefits.
The acquisition is expected to be immediately accretive to cash earnings per share and to free cash flow generation.
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