Continuing the trend of consolidation at the top of the rental industry, Aggreko PLC last week reached a definitive agreement with General Electric Co. to acquire GE Energy Rentals for $212 million cash.
Aggreko, a global provider of temporary power, temperature control and oil-free compressed air has agreed to acquire the assets and activities of GE Energy Rentals with the exception of those relating to large gas turbines.
The acquisition supports Aggreko’s strategy of growing its core business in power and temperature control by fleet investment, geographic expansion and acquisitions. It also strengthens Aggreko’s position in key geographic areas, particularly Central and South America, as well as adding scale in the United States, Europe, the Middle East, Asia and Australia.
The acquisition increases Aggreko’s core rental fleet capacity by about 30 percent and improves its capability in entertainment, emergency response and gas-fueled power generation.
Aggreko expects about $35 million in operating profit to be delivered by the assets within three to four years. The company said it doesn’t expect the acquisition to impact earnings per share in 2007, but that it would be materially accretive thereafter, with return on invested capital exceeding the cost of capital by 2008.
“This is an important acquisition for Aggreko and a milestone in the implementation of our strategy of driving the growth of our core business through capital investment in new fleet, geographic expansion and acquisitions,” said Rupert Soames, chief executive of Aggreko. “The acquisition of GE Energy Rentals substantially increases our rental fleet, improves our access to key regions and brings experienced people who can support our growth. We will achieve valuable synergies in the enlarged group by removing duplicate infrastructure and overheads. For the many GE Energy Rentals employees who will transfer to Aggreko as a consequence of the acquisition, it provides the opportunity to work for a company that is completely focused on energy rentals and that is a global player.”
The acquisition marks the second major purchase this month of a U.S.-based rental company by a U.K.-based firm, with Ashtead plc, parent company to Sunbelt Rentals, completing its acquisition of NationsRent September 1.
Aggreko is based in Glasgow, Scotland, U.K., with U.S. headquarters in Houston. The company is No. 13 on the RER 100. GE Energy Rentals, based in Atlanta, is No. 21 on the RER 100.
