04.07.2018

Another United acquisition

US-based United Rentals is to acquire BakerCorp International Holdings for $715 million in cash from its owner, investment group Permira, which acquired it in 2011 for $960 million.

The deal is expected to close in the third quarter of 2018. BakerCorp rents a wide range of tanks, pumps, filtration and trench shoring equipment for a broad range of industrial and construction applications and operates in both North America and Europe.

BakerCorp employs around 950 at 46 locations in the United States and Canada, plus four in France - Le Harve, Lyons, Strasbourg and Marseille - four in Germany - Hamburg, Dortmund, Munich and Leipzig - one in the Netherlands just north of Breda and two in the UK in Bridgend, Wales and Scunthorpe, England. The company also had a location near Lodz, Poland but this has not been mentioned in the release.

Annual revenues for the 12 months to the end of May were $295 million, with international operations representing around $44 million of the total. Revenues had been slipping as the oil industry suffered, dropping from $332 million in 2015 to $278.6 million in 2018. It has also posted pre-tax losses, which totalled $37 million in 2018.

BakerCorp was established in 1942 as a vacuum truck company, serving the Bakersfield oilfields in California, introducing the Baker tank in 1947. Today it runs a fleet of 24,000 items. United believes that it will offer significant opportunities for cross-selling, particularly from its Pump Solutions unit. United will give the Bakercorp locations access to its systems and technology and expects to create approximately $19 million in direct cost synergies over corporate overhead and shared services.

United’s chief executive Michael Kneeland said: “We are very pleased to announce an agreement to acquire BakerCorp, an expert in fluid solutions and a highly regarded, customer-focused operation. We are gaining a terrific team that shares our strong commitment to safety and customer service, and operations that complement our North American pump and trench offerings. This transaction will also be our company’s first experience in Europe, where BakerCorp has established an attractive, fast growing business with significant future opportunity.”

“We set a high bar across strategic, financial and cultural metrics when evaluating any acquisition. BakerCorp met every test, with the additional advantage of being primed to benefit from our systems and technology. We expect the combination to augment our revenue, earnings and EBITDA in 2018, while propelling the growth of one of our most promising specialty segments.”

BakerCorp chief executive Bob Craycraft added: “I am extremely proud of what our team has built. The value we have delivered for our customers has created this new opportunity to be part of the largest equipment rental company in the world. The combination with United Rentals is an exciting development for the future of both our customers and employees.”

Vertikal Comment
This is an interesting move for United, in that in addition to substantially boosting one of its specialist divisions, it provides a toe-hold in Europe, which will be its first taste of doing business in the continent. Whether this will put it off taking further steps or give it a taste for further expansion, only time will tell.

In the meantime, the timing of the deal looks good for United, given the current recovery of the oil business as prices continue to rise.