Was it a surprise that United Rentals announced it is exploring strategic alternatives, including a possible sale of the company? In the current environment of private equity, not at all. Private equity firms have forked over big money to acquire Rental Service Corp., Hertz Corp., NES, Neff Corp. and other rental-related companies, so why shouldn’t the biggest prize of all take a look at the market to see what it would bring? With equity valued at around $2.6 billion and debt at $2.7 billion, we’d be looking at $5.5 billion as a starting point, and I would think a company with strong financials, good systems and a good management team would fetch considerably more on the open market. And if it doesn’t get what it hopes for, it won’t sell.
As for Wayland Hicks, the former Xerox Corp. operations chief who announced his retirement last week has brought a degree of intelligence and expertise not often seen in this industry. Wayland is a gentleman and one of the most down-to-earth people you’ll ever want to meet. Now I’m sure there are people out there who have had to negotiate with him or compete against him who might not be quite as kind, like a football team having to defend against Peyton Manning. Hicks, who hails from Indiana where Manning makes his living, embodies the best values of small-town Americana, but with a very sophisticated business understanding.
Nobody is irreplaceable, but Hicks leaves some hefty shoes to fill. I expect Mike Kneeland is up to the task. RER recently interviewed Hicks, and soon we’ll be running that interview in RER Reports.
Speaking of private equity, Odyssey Investment Partners acquired Neff two years ago, sold it two weeks ago and is now buying the tank division of NES. The money is flowing and all the more reason United Rentals would be expected to analyze its value.