NES Rental Holdings last week announced that it signed a definitive agreement to be acquired by affiliates of Diamond Castle Holdings LLC, a New York-based private equity firm. The transaction is valued at about $850 million, including the assumption of certain liabilities.

Diamond Castle will acquire all of the outstanding common stock of NES Rentals for $18.75 per share in cash. The purchase price per share represents a 42 percent premium to the company’s closing price per share of $13.25 on Jan. 12, 2006, the day the company announced it would explore strategic alternatives.

NES Rentals chairman and CEO Andrew Studdert said the implementation of a series of operating and revenue initiatives during the past two years has improved return on investment. “After undergoing significant change in recent years, NES Rentals has emerged as a well-positioned and profitable business,” Studdert said. “The progress we have made allowed us to be in a position to consider options to unlock the value of our company.” Studdert has agreed to continue on in his capacity as CEO and chairman following the transaction. Diamond Castle expects to retain NES Rentals’ company name, management team and product lines.

In December 2005, NES’ board of directors retained Bear, Stearns & Co. to assist in reviewing strategic alternatives. “As part of this effort, the board undertook a wide-ranging auction process, ultimately resulting in the decision that the offer from Diamond Castle is in the best interests of the company and its shareholders,” said Studdert.

Completion of the sale is expected within 60 days, contingent upon customary closing conditions, including regulatory approvals, delivery of the committed financing, and the approval of NES Rentals’ stockholders.

Based in Chicago, NES Rentals is No. 7 on the RER 100.