United Rentals Sells Traffic Control Business for $85 Million

December 27, 2006 • In an effort to focus its resources on segments with the greatest potential for growth and market leadership, United Rentals, Inc., Greenwich, Conn., has signed a definitive agreement to sell its traffic control business to HTS Acquisition, Inc., an organization formed of affiliates of private equity investors Wynnchurch Capital Partners and Oak Hill Special Opportunities fund, L.P., an affiliate of private equity firm Oak Hill Capital Partners, which purchased RSC Equipment Rental earlier this year. HTS Acquisition will pay $85 million in cash for the business, a figure that is subject to certain working capital and other adjustments.

 

The transaction is expected to close in the first quarter of 2007 and is dependent on particular customary closing conditions. It is not conditioned upon receipt of any regulatory approvals or purchaser financing.

 

United Rentals' traffic control business represents one of the company's three business segments. In 2005, the full-year traffic control revenues were $270 million, or 8% of the company's total revenues. In comparison, general rental, the company's primary segment, reported $3.11 billion of revenues in 2005, or 87% of total revenues. “While our traffic control operations showed steady improvement throughout most of 2006, our general rentals and trench safety, pump, and power segments are more consistent with our core strengths and vision,” said Wayland Hicks, chief executive officer for United Rentals.

 

As a result of the definitive agreement, United Rentals expects to recognize a fourth quarter 2006 loss on sale in the range of $0.19 to $0.24 per diluted share. This loss on sale, as well as prior period and full year 2006 results for the traffic control segment, will be reflected in discontinued operations when the company reports its fourth quarter and full year 2006 results. The divestiture is not expected to have a material impact on 2007 results.