GREENWICH, Conn. — United Rentals last month announced that its board of directors has authorized a process to explore a broad range of strategic alternatives to maximize shareholder value, including a possible sale of the company. United has retained UBS Investment Bank and Credit Suisse to act as financial advisors in the process.
United officials said the exploration of alternatives will not necessarily result in a transaction. The company said it does not plan to disclose further developments regarding the process until the board of directors completes its evaluation or approves a specific transaction.
The company also announced that Wayland Hicks will retire as CEO effective at the annual shareholders meeting June 4 and will continue to serve as board vice chairman. The 64-year-old Hicks, part of the original team that founded United Rentals in 1997, will be succeeded by Michael Kneeland as interim CEO. Kneeland currently serves as executive vice president and chief operating officer of United Rentals.
“We deeply appreciate Wayland's significant contributions over the past decade and the leadership he has demonstrated,” said United chairman Brad Jacobs. “We are fortunate that Wayland will continue to serve on our board and offer his insights as we take this process forward. We are pleased that the position of interim CEO will be filled by Michael Kneeland, who has been with the company since 1998. Mike has more than 25 years experience in the equipment rental industry and is extremely knowledgeable about our operations and markets.”
“Wayland was there for 10 years, he grew the company from start-up to $4 billion in size,” added rental industry consultant Dan Kaplan, Daniel Kaplan Associates, Morristown, N.J. “The industry is a better industry for United and what Wayland brought to it. I'm sorry he'll be leaving. I know him well and respect him very much, he's the ultimate professional.
“As for the exploration process, United is a very attractive company. It has scale, it has good processes, and it has an incredible management team. Mike Kneeland is a very good manager and the structure of the company is good. EBITDA margins are a little low versus the company's potential, but it is on process to improve the margins. I believe revenue will grow and margins will grow at an even better rate. The company will be very attractive to private equity and to strategic buyers as well. For United the best days are ahead. I don't know how the process will go, whether it will sell or if they will maintain it, but the company will draw great interest.”
Despite its intentions to explore strategic alternatives, United Rentals intends to invest more than $900 million in capital in 2007, CEO Wayland Hicks told RER in a recent interview. In fact, according to company officials, United Rentals' growth plans have not changed and the company is going forward with “business as usual.”
Hicks said United Rentals has budgeted about $125 million in growth capex. “Our outlook is based on the expectation that private non-residential construction spending in North America will continue to grow in 2007, although at a more moderate pace than we saw in 2005 and 2006.”
Hicks also said United Rentals plans to open 30 to 35 new branches in 2007, after opening 36 cold starts in 2006. He added that the company still intends to add about $100 million a year in revenue through acquisition.
Based in Greenwich, Conn., United Rentals is No. 1 on the RER 100.
