The two largest American rental companies are merging.
United Rentals Inc. on Dec. 16 inked a deal to buy RSC Holdings Inc. for $1.9 billion. As part of the deal, which United expects to close in the first half of next year, United will also assume $2.3 billion in debt, for a total value of $4.2 billion.
"This transaction marks a transformative moment in our company's history," says Michael Kneeland, United's president and CEO. "Combining the experience and resources of two top-performing equipment rental companies creates an exceptional company." Kneeland plans to stay in his position after the closing.
Erik Olsson, RSC's president and CEO, says the purchase could help both firms grow business. "We can accomplish far more than either company could have achieved on its own," Olsson says. The companies also plan to shave $200 million in costs by merging.
The cash-and-stock deal marks the largest acquisition in United's history. In 2007, United failed to sell out to Cerberus Capital Management. In 2006, RSC sold to private equity partners for nearly $4 billion. It went public the next year.
United is the largest rental company in the U.S., with 2010 rental volume of $1.83 billion; RSC is the second largest, with 2010 volume of $1.06 billion, according to RER, a magazine covering the equipment rental market.