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United Rentals, Inc. (URI) revealed that it has completed the formerly announced acquisition of General Finance Corporation (GFN). Shares of the equipment rental company have gained 137% over the past year.
United Rentals CEO Matthew Flannery commented, “We’re delighted to welcome our new customers and team members to United Rentals. This is an acquisition with strong strategic and financial merits, timed to serve the increasing demand in our end markets. It expands our growth capacity with the addition of leading mobile storage and modular office solutions, including over 900 employees with complementary expertise. As customers turn to us for the equipment they need, we’re giving them the industry’s most complete range of solutions to help them succeed.”
Management will update its financial guidance for FY2021 to include the merger in its upcoming second-quarter earnings report in July. (See United Rentals stock analysis on TipRanks)
Per the terms of the deal, UR Merger Sub VI Corporation, a wholly-owned subsidiary of United Rentals bought all the shares of General Finance for $19 per share in cash resulting in an enterprise value of $996 million, including net debt of $400 million.
General Finance’s preferred stock outstanding will be redeemed per their terms, and shares and debt will be delisted from the NASDAQ Global Select Market.
On May 4, Argus Research analyst John Eade reiterated a Buy rating and increased the price target from $280 to $360 (11% upside potential) on the stock.
Eade was impressed by the upbeat Q1 results and improving volume trends seen in the last quarter. He further estimates positive indicators to persist in the coming months.
Overall, the stock has a Moderate Buy consensus rating with 5 Buys, 4 Holds, and 2 Sells. The average analyst price target of $338.70 implies 4.4% upside potential from current levels.
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