Specialty rental services company General Finance Corp. (GFN:NASDAQ), which provides mobile storage, liquid containment and portable modular space services, yesterday announced that it entered into a definitive agreement to be acquired by United Rentals Inc. (URI:NYSE) for $19 per share in cash. The firm stated that the price represents a total enterprise value of approximately $996 million with United Rentals assuming $400 million of General Finance's net debt.
General Finance employs more than 900 people and provides mobile storage and modular office space with a network of 106 branches. The company offers portable services to just about every industry classification imaginable including commercial, construction, consumer, educational, governmental, industrial, natural resources, petrochemical, retail and transportation. The firm conducts its operations under the Pac-Van and Container King names in the U.S. and Canada and Royal Wolf in Australia and New Zealand.
The reported indicated that General Finance has annual revenues of about $346 million and that as of December 31, 2020, "its rental fleet consisted of approximately 100,000 units at an original cost of approximately $639 million."
The firms indicated the respective boards of directors of each of the companies have already unanimously approved the transaction, which remains subject to ordinary closing conditions and regulatory approvals. United plans to make a tender offer to General's common shareholders to purchase 100% of the outstanding shares for $19 per share in cash by April 26, 2021. The report stated that the acquisition is expected to close in Q2/21. United Rentals expects to fund the purchase using cash on its balance sheet and funds available on its credit line.
"General Finance's positioning as a leader in the North American sector for mobile storage and office solutions strongly complements United Rentals' leading positions in general construction and industrial rentals and specialty rentals," the companies noted.
"United Rentals sees significant potential upside to profitability from the transaction over the next several years, driven by synergies within the combined operations, complementary services, efficiencies of scale and an aggressive growth strategy. The company is targeting $65 million of total revenue synergies in the first three years post-close," the release stated.
United Rentals President and CEO Matthew Flannery commented, "We see strong growth potential from this combination, including our ability 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're confident the time is right to reengage in M&A with this highly strategic combination, as our end markets recover from the challenges of 2020. General Finance is a customer-focused organization with excellent field operators and specialized expertise that complements our own," Flannery added.
General Finance Corp.'s CEO Jody Miller remarked, "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."
United Rentals employs approximately 18,250 people and is the world's largest equipment rental company, headquartered in Stamford, Conn. The company offers around 4,000 different types of consumer and industrial equipment for rental throughout 1,154 locations in North America and 11 in Europe. The firm services locations in 49 of the 50 U.S. states as well of each of Canada's provinces.
General Finance is a specialty rental services company based in Pasadena, Calif. The firm provides portable storage, modular space and liquid containment services and solutions through its subsidiaries Pac-Van, Inc. and Lone Star Tank Rental Inc. The company also owns Royal Wolf, which leases portable storage solutions in Australia and New Zealand and Southern Frac LLC, which manufactures portable liquid storage tank containers.
General Finance Corp. started off the day with a market cap of around $367.9 million with approximately 30.23 million shares outstanding. GFN shares opened 56% higher today at $19.00 (+$6.83, +56.12%) over yesterday's $12.17 closing price and reached a new 52-week high this morning of $19.015. The stock has traded today between $18.90 and $19.015 per share and is currently trading at $18.96 (+$6.79, +55.79%).
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