United Rentals, Inc. and BlueLine Rental announced they have entered into a definitive agreement under which United Rentals will acquire BlueLine from Platinum Equity for approximately $2.1 billion in cash.

The board of directors of United Rentals unanimously approved the agreement. The transaction is expected to close in the fourth quarter 2018, subject to Hart-Scott-Rodino clearance and customary conditions.

BlueLine is one of the ten largest equipment rental companies in North America, serving over 50,000 customers in the construction and industrial sectors with a focus on midsize and local accounts. The company has 114 locations and over 1,700 employees based in 25 U.S. states, Canada and Puerto Rico. For the trailing 12 months ended Aug. 31, BlueLine generated an estimated $313 million of adjusted EBITDA at a 39.8 percent margin on $786 million of total revenue.

Strategic Rationale

• BlueLine’s footprint will increase United Rentals’ capacity in many of the largest metropolitan areas in North America, including both U.S. coasts, the Gulf South and Ontario.
• BlueLine has a well-diversified customer base that aligns well with United Rentals’ base, with a balanced mix of commercial construction and industrial accounts. The combination will add more midsize and local accounts to United Rentals’ base.
• The combination will make a broader range of fleet and services available to BlueLine customers, creating opportunities to cross-sell specialty solutions.
• The addition of BlueLine’s fleet will expand United Rentals’ fleet by over 46,000 rental assets with an original cost of approximately $1.5 billion.
• BlueLine and United Rentals utilize 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.

The combination is expected to generate approximately $45 million of cost synergies in the areas of corporate overhead, operations and third-party re-rent, and improve returns on BlueLine used equipment sales. Additionally, United Rentals expects to realize approximately $15 million of fleet and other procurement savings based on the combined spending.

The transaction is not conditioned on financing; United Rentals expects to use a combination of newly issued debt and bank borrowing to fund the transaction and related expenses.

“The acquisition of BlueLine meets all of our criteria for long-term, profitable growth at attractive returns. 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,” said Michael Kneeland, chief executive officer of United Rentals.

Louis Samson, partner at Platinum Equity, said, “BlueLine has evolved into a strong industry leader and is in perfect position to take the next step as part of United Rentals. Following the initial carve out from Volvo four years ago, we deployed the full range of Platinum’s M&A&O tool kit to completely transform the business. Substantial investments in systems, add-on acquisitions and other growth initiatives drove improvements in top-line and earnings performance. It is a natural fit with United Rentals, and both companies will benefit from the combination.”

United Rentals, Inc. is the largest equipment rental company in the world. As of July 31, 2018, the company had an integrated network of 1,054 rental locations in North America and 11 in Europe, with approximately 16,400 employees serving construction and industrial customers, utilities, municipalities, homeowners and others.

BlueLine Rental serves customers in major construction and industrial sectors in North America with a network of 114 locations, primarily in the United States, and approximately 1,700 employees. The company has over 46,000 units of fleet in aerial, material handling, earthmoving, compaction and other general equipment categories, with an original equipment cost of approximately $1.5 billion.