RSC, NationsRent to Merge

Feb. 1, 1999
SCOTTSDALE, Ariz-In a deal that would create the equipment rental industry's second billion-dollar company, Rental Service Corp. and NationsRent agreed

SCOTTSDALE, Ariz-In a deal that would create the equipment rental industry's second billion-dollar company, Rental Service Corp. and NationsRent agreed to merge last month.

Combined, the two companies will have an annual revenue run rate of $1.2 billion from more than 375 locations in 38 states and Canada.

The stock-for-stock transaction is valued at about $366 million, based on prices on the eve of the announcement. Under the terms of the deal, which is subject to shareholder and regulatory approval, each share of NationsRent will be exchanged for 0.355 share of RSC. The merger is expected to be finalized in the second quarter of 1999, according to the companies.

RSC chairman and CEO Martin Reid will become chairman of the new company; NationsRent chairman and CEO Jim Kirk will become vice chairman, president and CEO.

"We feel like we know NationsRent very well because, quite frankly, we tried to acquire several of the rental businesses that they were successful in acquiring," Reid said.

Reid added that the merged company will do business as RSC NationsRent before eventually switching over to the NationsRent name. "Both companies have strong brand equity, so we are going to start as RSC NationsRent," Reid said. "It is our intention to segue all of our stores to the NationsRent name and brand."

RSC's headquarters here will become the merged compan y's center of operations, while NationsRent's offices in Fort Lauderdale, Fla., will serve as a regional base.

Reid said all NationsRent outlets will install RSC's MIS hardware and software developed by Wynne Systems, which is owned by United Rentals, but that the company will continue to develop NationsRent's proprietary software with the plan of converting to that system in the future.

The deal creates a strong potential competitor for Greenwich, Conn.-based United Rentals, which merged last year with U.S. Rentals in a $1.2 billion deal. United currently has an annual revenue run rate of $1.55 billion from more than 400 locations in 38 states, Canada and Mexico.

RSC NationsRent plans to add at least 50 new outlets by the end of the year, Reid said.

"Both [RSC and NationsRent] employ a hub/satellite strategy to simultaneously maximize customer service and asset utilization in its markets," said NationsRent's Kirk. "RSC NationsRent will have the broadest market coverage in 23 of the 38 states in which it operates. Our current markets are highly complementary and present us the opportunity for rapid geographic expansion and deeper market penetration."