United Rentals To Acquire National Pump For About $780 Mln

(RTTNews) - Construction equipment rental company United Rentals, Inc. (URI) agreed Sunday to acquire pump technology company National Pump Co. LLC, comprising of four pump rental companies, in a cash and stock deal valued at about $780 million. The deal, expected to close early in the second quarter of 2014, has the unanimous approval of the board of directors of United Rentals and the partners of National Pump.

"This transaction is an important step in our strategy to create a company that delivers strong financial returns through the cycle. We have been executing against a plan to strengthen and diversify our business, as demonstrated by our 18 specialty cold starts in 2013 and 13 planned for 2014," United Rentals President and CEO Michael Kneelandsaid in a statement.

National Pump is the second largest specialty pump rental company in North America and the leading provider to the oil and gas end market. The deal will enable United Rentals to foray into the pump rental segment, which is one of the largest and highest growth specialty markets.

The four companies that are collectively called National Pump are National Pump & Compressor Ltd., Canadian Pump and Compressor Ltd., GulfCo Industrial Equipment LP and LD Services LLC.

The deal also provides United Rentals significant cross-selling and expansion opportunities and increases penetration of important energy-related end markets. It plans double the size of pump business within the next five years. The deal also supports its strategy of expanding higher margin and higher return assets.

Following the closure of the deal, National Pump will become part of the United Rentals' specialty division under the leadership of Paul McDonnell, Senior Vice President of Specialty Rentals. The key members of the senior management team have also agreed to join United Rentals.

The deal consideration comprises of $765 million in cash and $15 million in stock, while also providing for additional cash consideration based on achievement of certain financial targets. The deal, funded by existing cash and new debt, is expected to be accretive to United Rentals' free cash flow and earnings per share in 2014.

Citing the deal, United Rentals also raised its revenue guidance for the full-year 2014 to a range of $5.45 billion to $5.65 billion from the prior forecast between $5.25 billion and $5.45 billion.

On average, 12 analysts polled by Thomson Reuters currently expect the company to report revenues of $5.39 billion for fiscal 2014.

Further, the company said its current intention is to complete its $500 million authorized stock repurchase program by April 2015.

URI closed Friday's regular trading session at $88.49, up $0.01 or 0.01% on a volume of 1.85 million shares.