EVANSTON, Ill. — National Equipment Services acquired the operations of Brambles Equipment Services, the North American equipment rental operation of Australia-based Brambles Industries. The deal, which cost NES $94 million in cash plus an agreement to pay about $28 million of accounts receivables, was finalized Dec. 31.
Detroit-based Brambles grossed about $170 million in revenue in 2001, and has an original fleet cost of about $300 million NES CEO Kevin Rodgers told RER. Brambles' fleet is primarily comprised of rough-terrain and reach forklifts, scissor and boom lifts, and rough terrain and carry-deck cranes.
“The acquisition is very exciting for us on several levels,” Rodgers told RER. “It significantly increases our strength in the middle of the country, giving us enough critical mass to be profitable even at today's rates and today's level of demand. We made the acquisition at an extremely attractive purchase price, which improves our credit by decreasing our leverage. The acquisition of Brambles will add about $160 to $170 million to our revenues and we should see about a $50 million increase in annual EBITDA levels and accretion of at least 20 cents in earnings per share.” NES paid down more than $100 million in debt in 2001.
Evanston, Ill.-based NES obtained Brambles at slightly more than two times EBITDA. Rodgers pointed out that two or three years ago the price would have been five or six times EBITDA.
Rodgers, who served as CEO of Brambles for about seven years before leaving the company to found NES in late 1996, added that NES is gaining numerous experienced and capable employees and managers, particularly on the sales, service and management level. Rodgers said NES was uniquely positioned to make the acquisition and perform due diligence because of his personal knowledge of Brambles' operations and management team. A number of other NES managers previously worked for Brambles as well.
Rodgers added that NES was also attracted to Brambles' significant presence in the automotive sector, where Brambles achieved significant growth as a “Tier 1” supplier to the “Big 3” automobile manufacturers. Rodgers said the two companies overlap in about a dozen markets, and the potential exists for cost savings through consolidation and enhanced efficiencies.
The combined operations of NES and Brambles will generate revenue of about $800 million this year, Rodgers expects, which would probably make NES the fourth largest company in the rental industry.
The acquisition is the fourth largest in the industry's history. In 1998, industry-leading United Rentals acquired then No. 2 U.S. Rentals; in 1999 No. 3 Rental Service Corp. and No. 4 Prime Equipment, both owned by Atlas Copco, merged to create the industry's second largest rental firm; and in 2000 No. 10 Sunbelt Rentals acquired BET Plant Services, then No. 6, which brought Sunbelt into the No. 5 slot on the RER 100. NES was No. 6 on last year's RER 100; Brambles was No. 9.
Rodgers announced several management changes to facilitate the integration process. NES will divide its central region, combined with Brambles, into north and south. NES executive Bob Bogardus, will serve as regional vice president of NES' new north-central region. Chief financial officer Dennis O'Connor will move to Detroit and serve as north-central financial vice president; and Don Irwin, who had been running NES' central region, will move to Memphis to run the newly created south-central region.
Brambles had 39 locations in 17 states and the province of Ontario. The acquisition gives NES 239 locations in 38 states and one Canadian province.
In a related development, Brambles Australia Limited last month sold its Australian rental business, known as Wreckair, to Australia's largest rental business, Coates Hire Limited. Wreckair was the second largest Australian rental company.