RSC Rejects United's Hostile Bid SCOTTSDALE, Ariz. -Rental Service Corp. last month rejected a $1.36 billion hostile takeover bid by United Rentals, as both companies launched legal salvos in a three-way tug-of-war with NationsRent for control of the industry's third-largest rental company.
In its recommendation to shareholders to reject United's cash offer of $22.75 per share, RSC's board said "the offer represents a discount to RSC's historic trading prices and multiples" and that numerous conditions contained in the offer could not be satisfied by United or RSC alone.
While it left the door open for United to propose a better offer, RSC said it would continue with plans to merge with NationsRent.
At the same time, RSC announced that CEO Martin Reid, who has led the company since 1994, was taking medical leave due to an ongoing heart condition. In Reid's absence, RSC established an executive committee headed by director John Sullivan to work with management, including CFO Rob Wilson and COO Doug Waugaman.
Upon RSC's rejection, United said it would continue to pursue its bid for the company, based here. "[The] announcement by Rental Service Corp. confirms our view of the cavalier attitude of Rental Service's board toward its shareholders," the company said.
Three days earlier, United had turned the screws tighter in its hostile bid, which includes the assumption of $810 million in debt. In separate court filings, United took initial steps to seek a proxy vote from RSC stockholders to reject the proposed merger with NationsRent, and to get their consent to replace the RSC board of directors with nominees provided by United.
"We believe the Rental Service board should support our cash offer, but we want to be in a position to replace the board if it seeks to deny its stockholders the right to accept our proposal," said United chairman and CEO Brad Jacobs.
In response, RSC adopted a shareholder rights plan - a so-called "poison pill" - that would be triggered if any party acquires more than 10 percent of its stock, making a takeover prohibitively expensive.
RSC said the United offer did not reflect its "strong performance and excellent prospects and is an attempt to take advantage of current low trading levels, without paying any premium."
Last month, RSC reported record financial results for its first quarter ended March 31, 1999, with total revenues up 61 percent to $174.8 million and operating income up 75 percent to $30.1 million. Same-store sales growth was up 26.7 percent.
RSC also announced that it would file a counterclaim for violations of federal securities laws against United and Jacobs, alleging, among other things, that United "misstated and concealed the fact that its offer is subject to a financing condition, and that there is no assurance that it will obtain financing for its offer."
In January, RSC agreed to merge with NationsRent, Fort Lauderdale, Fla., in a deal that would exchange each share of NationsRent stock for 0.355 share of RSC stock. Originally valued at about $356 million, the value had dropped significantly because of declines in RSC and NationsRent stock prices.
United Buys Forte, 11 Others GREENWICH, Conn. -United Rentals has acquired 12 rental companies with 46 locations and combined 1998 revenue of more than $75 million, including Forte Rentals, which operates 15 rental outlets in Washington state.
Others acquired by the equipment rental giant, based here, were:
* Tank rental specialist Texoma Tank, which has about $7 million in annual revenue from its headquarters in Houston and branches in Louisiana (two), Georgia, Pennsylvania and Tennessee.
* DePere, Wis.-based High Lift Equipment with branches in Minnesota (two), South Dakota and Wisconsin.
* Dothan, Ala.-based Loftin Rent-All and its three Alabama branches.
* Three-location Buffalo Scaffold, based in Buffalo, N.Y., with two New York outlets.
* Three-location A & B Tool & Equip-ment Rental, based in Wasilla, Alaska.
* Anchorage, Alaska-based Stephan's Tool Rental & Sales (two locations total).
* Two-location City Equipment, based in Mississauga, Ontario, Canada.
* Tool Shed of Indianapolis and its one Indiana branch
* Two-location Westside Rentals, Knoxville, Tenn.
* One-location Connecticut Valley Equipment Co., Agawam, Mass.
* One-location Empire Ready Mix, Folsom, Calif.
The deal for Tukwila, Wash.-based Forte, first reported in RER Reports, gives United 56 stores in Washington and Oregon, according to chairman and CEO Brad Jacobs. Forte had 1998 total revenue of about $30 million, according to United.
About $48 million of the acquired companies' $75 million-plus in total revenue is generated from rental, Jacobs said. He added that United paid mostly cash for the companies and that the company is on track to add as much as $500 million in revenue via acquisition by the end of the year.
"With the 24 companies we currently have under letters of intent, we'll have 520 branches and a pro forma annual revenue run rate of more than $2 billion," Jacobs said.
United currently has 470 locations in 40 states, Canada and Mexico.
United Makes Fortune 1,000 List GREENWICH, Conn. - United Rentals ranks No. 958 in Fortune magazine's latest list of America's 1,000 largest companies based on annual revenue.
The ranking of the consolidator, based here, is believed to be the first time that a company that derives most of its revenue from equipment rentals has appeared on Fortune's list. Fortune grouped United in its "miscellaneous" industry category.
With $895 million in rental revenue and $1.2 billion in overall sales in 1998, United is No. 1 on this year's RER 100.
Cat to Accelerate Rental Openings PEORIA, Ill. -Caterpillar Inc., whose dealers have been slowly rolling out rent-to-rent outlets nationwide for several years, plans to increase the number of dealer-owned The Cat Rental Store locations by 50 percent next year.
Caterpillar intends to open 100 new rental outlets in the United States and Canada by the end of 2000, increasing the number of Cat dealer-operated rental centers from 200 to 300. It also intends to add 100 rental locations each in Europe and Latin America, company chairman and CEO Glen Barton said at the ConExpo-Con/Agg trade show in March in Las Vegas.
The company said the continued push to get its distributors into the rent-to-rent market is in response to growing worldwide demand for short-term usage of construction machines. "There is an increasing need and demand by users to rent machines on a fairly short-term basis," said Ronald Bonati, vice president for Cat's North American Commercial division.
Also at Conexpo, Caterpillar, based here, unveiled its new skid-steer loader line, which the company plans to distribute primarily through Cat rental outlets, according to Bonati.
New Rental Firm Makes Acquisitions COLUMBUS, Ga.. - A new company led by the former president of General Rental/Rental 1 recently entered the rental industry with the acquisition of two Texas rental centers.
The Rental Equipment Group, headed by ex-General top officer George Johnson, has acquired three-location Aztec Rental Center, Victoria, Texas, and one-location North Main Tool Rental, Houston.
Rental Equipment Group, based here, plans several more acquisitions in the near future, although Johnson said that REG's business plan does not call for becoming a big-time consolidator.
"We're exploring some other [acquisition] opportunities, but we're not trying to be a consolidator," Johnson said. "We're different from consolidators in that our focus in on the rental industry, not Wall Street."
Johnson said preliminary plans involve acquired companies operating under current management and doing business with their existing business names.
Johnson resigned as president of Pompano Beach, Fla.-based Rental 1, formerly General Rental, in 1997.
HERC Acquires French Rental Firm PARIS - Hertz Equipment Rental Corp., which has significantly grown its presence overseas by acquisition, has acquired suburban Paris rental firm Baudart SA. Terms of the deal for the one-location company were not disclosed.
Baudart had 1998 total revenue of about $3.1 million, according to HERC. "In many respects, Baudart is a model of how to build up the equipment rental business in this important region," said Michel Taride, general manager of Hertz France and HERC Europe.
HERC, which in the past two years has acquired French rental companies Viamat and Boireau, is the third-largest equipment rental firm in France, according to the Park Ridge, N.J.-based company. It also has branch outlets in Spain.
MBA Drops Monthly Fee MOLINE, Ill. - The American Rental Association's executive committee and National Hardlines Supply recently dropped the $80-per-month fee to participate in the Member Buying Alliance.
"This is really a positive move for the members," said Dick Frechette, who has replaced Joe McKenney as MBA committee chairman. "The MBA members are just getting used to how a buying group works, so this will give them more time to build their orders and build the program without worrying about a monthly fee."
The MBA program has handled $6.5 million in orders since July 1, 1998, with more than 300 participating suppliers, according to the ARA.
NES Acquires Midwest Traffic Control Specialists MUSKOGEE, Okla. -National Equipment Services has acquired two companies specializing in the rental of barricades, warning lights and other traffic-control equipment.
NES bought Advanced Warnings, based here, and finalized its acquisition of Lafayette, Ind.-based The Mike Madrid Co., previously reported in RER. owners Mike Pettis and Mike Madrid will stay on to run the companies.
Advanced Warnings also has branches in Tulsa and Meeker, Okla., and Junction City, Kan. It grossed $10.6 million in revenue last year, $7 million in rentals. Madrid, which also has branches in Evansville and Hope, Ind., made $7.1 million in total revenue in 1998, $6.5 million in rentals.
In the past year, NES also acquired Worksafe Inc., Grand Rapids, Mich.; TSM, Madison, Wis.; and Barricade & Light Rental in Phoenix, making it a major player in the burgeoning traffic-control equipment rental sector.
Evanston, Ill.-based NES now has 128 locations in 29 states.
L.B. Smith Buys Equipco SOMERVILLE, N.J. - L.B. Smith has acquired Equipco Sales & Rental Corp., a single-location heavy equipment and crane dealer based here.
The purchase gives L.B. Smith 30 locations in 14 Eastern states spanning New York to Florida. Last year, the company acquired independent dealers in New York and Georgia and is considering additional acquisitions, according to a company official.
L.B. Smith, based in Camp Hill, Pa., is No. 19 on the new rer 100.
Puerto Rico Rental Firm to Expand SAN JUAN, Puerto Rico - Puerto Rico's largest rental company, Compresores & Equipos, began a Latin American expansion effort this month by opening a branch in Santo Domingo, Dominican Republic.
Rental and marketing director Ernesto Pou told rer the company also plans to open a branch in Port-of-Spain, Trinidad and Tobago, next month and is studying other opportunities in Central and South America.
Compresores, No. 59 on the rer 100, nearly doubled its rental volume last year when it opened three branches, giving it seven Puerto Rico locations. The company partly attributes its growth to a significant investment in bulking up its fleet with larger equipment. A compressor specialist in the past, Compresores has added excavators, bulldozers, loaders, large generators and aerial work platforms to its rental fleet.
The company also plans to open a larger headquarters here later this year.
Burch-Lowe Opens Rent Source Locations ATLANTA - Burch-Lowe Inc. recently opened its third and fourth stand-alone RentSource locations in Athens and Woodstock, Ga., CEO Travis Burch told rer. Burch said the company, No. 40 on the rer 100, will open another RentSource location in the fall.
The company opened its first two Rent-Source facilities last year in the suburban Atlanta areas of Sugar Hill and McDonough. While Burch-Lowe's other branches include RentSource as well as equipment sales divisions, the new Rent- Source locations are exclusively for rentals.
The company, based here, has 11 branches, all in Georgia.
New Rental Focus Group Launched GREENSBORO, N.C. - In an effort to help independent rental firms compete in the face of industry consolidation, the president of Coble Equipment & Rentals is attempting to form a nationwide focus group for executives of construction equipment rental companies.
"A lot of independents out there want to stay that way," said Tom Coble, whose rental company is based here and has four North Carolina locations. "The new focus group will allow for an exchange of ideas among some of the top [independent] rental firms in the nation, all of whom have a wealth of experience and knowledge to share."
Currie Management Consultants, Worcester, Mass., will facilitate and plan the meetings for the group, which is expected to have 20 members.
For more information, call Tom Coble at 336/697-9200.
Sims Takes Over as SMA President RIVERSIDE, Calif. -Industry veteran Bud Sims has taken over the presidency of SMA Equipment Co., one of California's largest equipment distributors. SMA, based here, is a division of American Equipment Co., and has 10 locations in the state. It grossed $16 million in 1998 rental revenue and $65 million total revenue, an increase of almost 100 percent over 1997.
Sims, who joined SMA in 1997 as vice president and played a major role in the company's recent growth, replaces Dick Circle, who has accepted a position with American, promoting the company's business with major corporate accounts internationally and domestically. Sims told RER his goals are to improve the parts and service departments, enhance the company's product support capabilities and create a new sales and marketing program. Sims has already hired several new salespeople to beef up the company's efforts in that area.
Sims also hopes to augment SMA's short-term rental program and says the company's recent purchase of 10 equipment delivery vehicles will enhance its ability to service customers quickly.
Before joining SMA, Sims worked for Caterpillar in various capacities for 21 years. He also served as vice president and rental division manager for Hawthorne Rent-It Services, a San Diego-based Caterpillar dealer.
In other SMA news, the company plans to open an 11th location in Santa Paula, Calif., next month. SMA recently took possession of a facility that be-longed to a large contractor and has staff converting it into a distributorship and rental center.
SMA represents Komatsu, JCB, Ingersoll-Rand and other major equipment lines.
ConExpo Draws Huge Crowds LAS VEGAS -ConExpo-Con/Agg, the largest construction trade show in the Western Hemisphere, lived up to its billing, drawing more than 120,000 people here in March.
Total pre-registration and four-day walk-up registration of attendees, exhibitors and staff personnel totaled 121,286, according to show promoters. More than 1,700 companies exhibited at the show, which covered more than 40 acres of space in and around the Las Vegas Convention Center.
FMC Rents Opens Second Outlet FREDERICK, Md. - FMC Rents, the rental arm of eastern Pennsylvania Komatsu dealer Furnival Machinery Co., recently opened its second dedicated rent-to-rent operation.
The branch here, about 170 miles from FMC's Downingtown, Pa., rental outlet, will be housed in a temporary facility while FMC officials search for real estate to build a permanent facility.
FMC plans to open two more branches in the Northeast by mid-2000, according to vice president of rental operations Steve Diloreto, who would not disclose exactly where those outlets would be.
Furnival Machinery, based in Hatfield, Pa., is one of three Komatsu dealerships that the manufacturer acquired in 1997 in part to demonstrate to other Komatsu distributors that the rent-to-rent market was worthy of significant investment.
Do it Best Rental Tops 500 Members FORT WAYNE, Ind. -Do it Best Corp. recently surpassed 500 Do it Best Rental Center members - a 20 percent increase from last year, according to the third-largest hardware co-op, based here.
The 5-year-old Do it Best Rental Center program, which includes free-standing rental center and rental departments within retail stores, was recently moved into Do it Best's store development group under the management of Brian Kimball, who developed the rental program.
"Rental is now part of a complete store-development marketing effort, which offers members additional services such as market analysis, store design and merchandising," Kimball said.
Do it Best Corp. has 4,000 retail members.
Ivy Hi-Lift Opens Portland-Area Branch PORTLAND, Ore. - Ivy Hi-Lift recently opened a branch in Hillsboro, a suburb of this northwestern city.
The Hillsboro branch will offer Ivy's full line of services, including rental and sales of aerial work platforms, forklifts, scaffolding and other equipment. It will be managed by Tom Meeuwsen.
Ivy, based in Eugene, Ore., now has 18 locations in the western United States. Along with Aggregate Equipment and BPS Equipment, Ivy is a division of U.K-based Initial Plant Services, formerly owned by BET and now owned by Rentokil-Initial.
Ransome Rents Opens Branch ATLANTIC CITY, N.J. - Ransome Rents, the rental division of eastern Pennsylvania Caterpillar dealer Giles & Ransome, has opened a branch here, and plans to open a rental location in Limerick, Pa.
Ransome Rents recently moved a trailer here for temporary office space, and has begun renovating a building there that will become its permanent site. In Limerick, Ransome is building an 11,000-square-foot building from scratch on 4 acres.
Ransome, sister company of Bensalem, Pa.-based Giles & Ransome, opened its first The Cat Rental Store location last year in Allentown, Pa.
Rust Opens Two Rental Stores EL PASO, Texas -Rust Tractor Co., the Caterpillar dealer for New Mexico and the El Paso, Texas, area, has opened two rental facilities here and in Albuquerque, N.M.
The new Rust Rentals branches will provide short-term rentals of Cat and non-Cat construction lines, from boom lifts and earthmoving equipment to trenchers and welders. Danny Ferdinandus and John Duke will manage the Albuquerque and El Paso branches, respectively.
Rust Tractor has four sales locations in Albuquerque, Farmington and Hobbs, N.M., and El Paso.
Tobeler Sentencing Postponed LOS ANGELES, Calif. -The sentencing of former rental center owner Paul Tobeler, who was convicted last year of masterminding a million-dollar scheme to sell stolen rental equipment, has been postponed, according to the Department of Justice.
Tobeler, originally scheduled to be sentenced in September, was expected to be sentenced here last month. No information was available regarding the cause o f the latest continuance, although a Department of Justice official said he now expects Tobeler to be sentenced May 17.
Komatsu Dealer Launches Alabama Rental Program BIRMINGHAM, Ala. - Tractor & Equipment, one of Komatsu's top U.S. dealers, recently opened its first dedicated rent-to-rent outlet in Alabama and plans to open as many as 10 more in the state.
TEC Rentals, a subsidiary of Tractor & Equipment, opened its first outlet last month here. The rental company is sharing real estate with the dealership, although TEC Rentals is operating in a different building with a separate seven-person staff and inventory from its parent, which is based here.
While Frank Lang, the general manager of TEC Rentals, was unavailable for comment, it is believed the company is planning a second outlet in southern Alabama in the next few months, followed by branch openings in Montgomery and Dothan.
The new Birmingham branch, managed by Wendell Tidmore, has inventory ranging from 2-inch pumps to full-size excavators and is focused on contractor and industrial customers' short-term rental needs.
MIAMI - Neff Corp. recently retained investment bank Donaldson, Lufkin & Jenrette "to help it explore its strategic options, including putting itself up for sale."
"We have been approached by more than one interested party and, accordingly, the board felt it would be appropriate to formally evaluate our options," Neff CEO Kevin Fitzgerald told RER.
Neff, which operates 86 locations, will also consider selling or spinning off a portion of the company, or a recapitalization.
During the exploration process, which could find a quick resolution, Neff will not alter its business plan, according to Fitzgerald.
