United Rentals has announced a plan to acquire BlueLine Rental from Platinum Equity for about US$2.1 billion.
On Sept. 10, United Rentals announced its board of directors has unanimously approved the agreement. The transaction is expected to close in the fourth quarter of 2018, subject to customary conditions.
“The acquisition of BlueLine meets all of our criteria for long-term, profitable growth at attractive returns,” said Michael Kneeland, chief executive officer of United Rentals. “We’re executing our strategy of ‘growing the core’ in a strong demand environment to drive superior value for our customers and shareholders. Our company will be going to market with more talent, capacity and customer diversification than ever before.”
BlueLine is one of the 10 largest equipment rental companies in North America, serving more than 50,000 customers in the construction and industrial sectors with a focus on mid-sized and local accounts. The company has 114 locations and more than 1,700 employees based in 25 US states, Canada and Puerto Rico. In the last year, BlueLine generated an estimated $313 million of adjusted EBITDA at a 39.8 per cent margin on $786 million of total revenue.
BlueLine’s footprint will increase United Rentals’ capacity in many of the largest metropolitan areas in North America, including both United States coasts, the Gulf South and Ontario.
BlueLine has a diverse customer base that aligns with United Rentals’ base, with a balanced mix of commercial construction and industrial accounts. The combination will add more mid-sized and local accounts to United Rentals’ base.
As well, the addition of BlueLine’s fleet will expand United Rentals’ fleet by over 46,000 rental assets with an original cost of about $1.5 billion.
Furthermore, BlueLine and United Rentals both use many of the same technology systems, including RentalMan for field operations.
The two companies have similar rental infrastructures, which will facilitate the integration and help with the onboarding of employees.
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“There are some distinct advantages to the BlueLine integration, such as our common technology systems and strong safety cultures. BlueLine has a fleet mix that complements our own, and a well-diversified base of mid-sized and local customers, many of whom can use our specialty solutions,” Kneeland said.
“We expect to complete the acquisition in the fourth quarter, setting the stage for an exciting 2019. I look forward to welcoming our new colleagues very soon.”
The combination of the two companies is expected to generate about $45 million of cost savings in corporate overhead, operations and third-party re-rent as well as improve returns on BlueLine used equipment sales. Additionally, United Rentals expects to see about $15 million of fleet and other procurement savings based on the combined spending.
“BlueLine has evolved into a strong industry leader and is in perfect position to take the next step as part of United Rentals,” said Louis Samson, a partner at Platinum Equity. “Following the initial carve out from Volvo four years ago, we deployed the full range of Platinum’s tool kit to completely transform the business.”