United Rentals to buy Ahern Rentals for $2 billion
By Murray PollokNovember 14, 2022
The transaction, which is expected to close before the end of the year, will bolster United’s footprint on both U.S. coasts and in the Gulf region and strengthen its aerial platform and telehandler fleets, which represent 75% of Ahern’s equipment.
United will fund the deal through a combination of new debt and existing asset-backed loans. The $2-billion price equates to 6.5 times Ahern’s adjusted EBITDA for the 12 months ended September 30.
Ahern Rentals is based in Las Vegas and was founded in 1953 by John Ahern, father of current CEO Don Ahern. The company began to focus on equipment rentals in 1958 and grew into one of the 20 largest rental businesses in the world and a top 10 operator in North America.
It is part of the Ahern Family of Companies owned by Don Ahern. Sister companies include aerial platform manufacturer Snorkel (which is 49% owned by Tanfield Group) and telehandler specialist Xtreme Manufacturing.
“We view ourselves as the ideal owner of these assets within our network, as customers will benefit from the combination of the two organizations moving forward together,” said Matthew Flannery, CEO of United Rentals. “We’re leveraging our competencies in larger-scale M&A to augment both our near- and long-term earnings power.”
Flannery said United’s “integration playbook” was now underway.
Don Ahern, Ahern’s CEO, said he was proud of the business that had been built over seven decades.
“I’m extremely pleased that the combination with United Rentals will take the business forward in this next chapter of growth,” he said. “I want to thank our employees for driving the results that make this transaction possible. This is a strong outcome for both organizations and our customers.”
Ahern employs 2,100 people in 30 states serving approximately 44,000 customers. It has a rental fleet valued at $1.85 billion (original cost). The current value of acquired assets is $426 million.
United said it would target $40 million annual cost savings through synergies within the first 12 to 18 months, with $60 million savings by the third year of ownership.
The deal leaves Ahern Group to focus on its equipment businesses - Snorkel and Xtreme - as well as its numerous sales subsidiaries and training and engineering companies.
For Don Ahern, it means an end to his lifelong direct engagement in equipment rentals, although he remains embedded in the industry as a supplier through the Snorkel and Xtreme businesses.
Ahern Rentals has been a high-profile rental business for decades. It survived a difficult period under Chapter 11 proceedings following the global financial crisis, but successfully exited that process in June 2013 and went on to capitalize on the rapid growth in rental in the country.
The deal cements United Rentals’ position as the world’s largest equipment rental business and also the number one in North America, with a market share in the 15% to 20% range. It reported revenues of more than $9.7 billion in 2021. Next largest is Sunbelt Rentals, owned by Ashtead Group, with North American revenues in excess of $7 billion.