United Rentals39 acquisition of BakerCorp39s strength in fluid storage transfer and treatment will combine well with United Rentals39 Pump Solutions and trench shoring capability Photo by United Rentals
United Rentals' acquisition of BakerCorp's strength in fluid storage, transfer and treatment will combine well with United Rentals' Pump Solutions and trench shoring capability.

United Rentals Acquires Fluid Solution and Trench Shoring Giant BakerCorp

United Rentals has reached a definitive agreement to acquire BakerCorp for $715 million in cash. The boards of directors of United Rentals and BakerCorp have unanimously approved the agreement and the transaction is expected to close in the third quarter.

BakerCorp is a leading multinational provider of tank, pump, filtration and trench shoring rental solutions for a broad range of industrial and construction applications. The company has approximately 950 employees service more than 4,800 customers in North America and Europe. BakerCorp’s operations are primarily concentrated in the United States and Canada, where it has 46 locations. It also has 11 locations in France, Germany, the United Kingdom and the Netherlands. For the trailing 12 months ended May 31, BakerCorp generated $79 million of adjusted EBITDA at a 26.9 percent margin on $295 million of total revenue.

United Rentals plans to update its 2018 financial outlook to reflect the combined operations after the transaction is complete.

BakerCorp has been in business for 75-plus years and has strong customer relationships in the industrial and construction sectors. The combined company will serve a larger strategic account base with a broader fleet range, including about 24,000 units to be acquired at closing. The combination is expected to create significant opportunities for revenue growth and customer service through cross-selling, re-rent conversion and scale. The combination of BakerCorp’s comprehensive solutions across fluid storage, transfer and treatment with United Rentals’ Pump Solutions unit will create an enhanced value proposition for customers in the broader fluid solutions space, with market-leading revenue of approximately $606 million proforma for trailing 12 months.

The integration of BakerCorp into United Rentals will give the acquired locations access to United Rentals’ systems and technology as well as process and data-driven efficiencies. The combined operations are expected to create about $19 million in direct cost synergies across corporate overhead and shared services, United Rentals said.

BakerCorp’s international operations, which accounted for approximately 15 percent of total revenue for its fiscal year ended Jan. 31, provide an attractive entry into select European markets for United Rentals’ rental of fluid solutions.

The purchase price of approximately $715 million in cash represents a multiple of nine times adjusted EBITDA for the trailing 12-month period ended May 31 and an adjusted purchase multiple of 6.6 times, including tax benefits and cost synergies. United Rentals expects to use a combination of cash and existing capacity under its ABL facility to fund the transaction and related expenses.

The acquisition is expected to be accretive to adjusted earnings per share with an attractive internal rate of return and run-rate ROIC exceeding cost of capital within 36 months after closing. The company expects its net leverage ratio to be approximately 2.5x at year-end 2018 and remains committed to executing its recently announced $1.25 billion share repurchase authorization.

“We’re very pleased to announce an agreement to acquire BakerCorp, an expert in fluid solutions and a highly regarded, customer focused operation,” said United Rentals CEO Michael Kneeland. “We’re gaining a terrific team that shares our strong commitment to safety and customer service, and operations that complement our North American pump and trench offerings. This transaction will also be our company’s first experience in Europe, where BakerCorp has established an attractive, fast-growing business with significant future opportunity.

“We set a high bar across strategic, financial and cultural metrics when evaluating any acquisition. BakerCorp met every test, with the additional advantage of being primed to benefit from our systems and technology. We expect the combination to augment our revenue, earnings and EBITDA in 2018, while propelling the growth of one of our most promising specialty segments.”

“I’m extremely proud of what our team has built,” said Bob Craycraft, president and CEO of BakerCorp. “The value we’ve delivered for our customers has created this new opportunity to be part of the largest equipment rental company in the world. The combination with United Rentals is an exciting development for the future of both our customers and employees.”

Centerview Partners acted as financial advisor to United Rentals, and Sullivan & Cromwell acted as legal advisor. Morgan Stanley & Co. LLC acted as financial advisor to BakerCorp and Fried Frank acted as legal advisor.

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