STAMFORD, Conn. & BEAUMONT, Texas -- United Rentals, Inc. (URI) announced that it has entered into a definitive asset purchase agreement to acquire National Pump, the second largest specialty pump rental company in North America. Under the terms of the agreement, United Rentals will also acquire GulfCo, a two branch general rental business also based in Texas. The combined purchase price for the assets is approximately $780 million. The Board of Directors of United Rentals and the partners of National Pump unanimously approved the proposed transaction.
With National Pump, United Rentals enters the pump rental segment, one of the largest and highest growth specialty markets. The company has been executing its strategy of expanding its specialty businesses, and this acquisition provides another significant product line with attractive margins and returns. In addition, National Pump will offer significant cross-selling opportunities with both United Rentals' and National Pump's customer bases.
Michael Kneeland, President and Chief Executive Officer of United Rentals, said, "This transaction is an important step in our strategy to create a company that delivers strong financial returns through the cycle. We have been executing against a plan to strengthen and diversify our business, as demonstrated by our 18 specialty cold starts in 2013 and 13 planned for 2014. National Pump provides an attractive new specialty offering which increases our penetration in growing end markets and advances over time our financial goals of delivering strong free cash flow and improved returns."
Kneeland continued, "Loddie Naymola and his team have done an outstanding job of building National Pump into the number two pump rental player and the leading provider to the oil and gas end market. We are pleased that key members of the senior management team are joining United Rentals and remain committed to growing the business. We see tremendous opportunities for National Pump and are eager to apply our standards for operational excellence, financial resources, and scale advantages to help National Pump realize its full potential."
National Pump was founded in 2007 and has grown at over 50% annually, from 2010 through 2013. The acquired assets recorded LTM revenue of $211 million and adjusted EBITDA of $103 million, representing an adjusted EBITDA margin of 49% on a fleet with an original equipment cost of $215 million. More than three quarters of National Pump's fleet is made up of pumps used in high value applications across a broad set of end markets. National Pump is a leading supplier of pumps for energy and petrochemical customers, with upstream oil and gas customers representing about 50% of its revenue. National Pump has grown revenue through a combination of new locations and a differentiated customer service offering, including customized pump configurations, best-in-class customer support, specialized training, and a strong safety record. National Pump has a total of 35 branches, including four branches in western Canada.
National Pump will become part of the United Rentals Specialty Division under the leadership of Paul McDonnell, Senior Vice President of Specialty Rentals.
McDonnell said, "The addition of pumps gives customers another compelling reason to turn to United Rentals for their equipment needs. We have worked with National Pump management to develop a plan to double the size of our new pump business within five years, and we are ready to implement it."