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FEBRUARY 2014 issue of
Rental Management

The Editors Page: When a shoe might drop
The Editor's Page: When a shoe might drop

It’s been more than two years since United Rentals somewhat shocked the equipment rental industry by acquiring RSC, which was then the second-largest equipment rental company in North America.

Since then, everyone has been waiting for the proverbial “other shoe” to drop with another blockbuster industry merger or acquisition. A few things have happened. Volvo Rents, for example, recently was sold by Volvo Construction Equipment to Platinum Equity for $1.1 billion.

Volvo Construction Equipment said the rental business didn’t have a “sufficiently strong connection” with the Volvo Group core operation.

Now the spotlight is shining on Hertz Equipment Rental Corp. While the board of Hertz Global Holdings, the parent company of Hertz Equipment Rental, has adopted a one-year shareholders rights plan, there has been much speculation that “activist” investors just might force a sale or spin-off of the equipment rental company.

Something might happen before this issue reaches our readers and then again, maybe not. The situation reminds me of the days when I was a reporter covering the network television industry in the 1990s. If memory serves me well, a rumor that General Electric would be selling or spinning off NBC would come up almost every month for more than a decade.

The rumored buyers included just about every major media company in the world at one time or another until NBC was merged with Universal Studios and eventually acquired by Comcast some 20 years later in 2011.

I’m a journalist, not a high-finance investor or stock market trader, so I’m not quite up to speed on all the nuances, but from what I’ve read, some of the arguments for Hertz to sell or spin-off Hertz Equipment Rental are that the subsidiary is capital intensive and its sale would improve the parent company’s cash flow and value for stockholders.

Also, Hertz Equipment Rental Corp. is performing at a high level right now, with revenues growing faster than the general economy and even better than the equipment rental industry average. This has led some analysts to conclude that now would be a great time to sell since the company is riding high and might be able to fetch a premium at a time when equipment rental revenue is growing.

Hertz executives also may not be against the idea of selling or spinning off Hertz Equipment Rental, although the impression I get from all the reporting on the situation is that the board of directors doesn’t want to be forced to make such a move because of activist investors.

In fact, it was in May of 2011 — nearly two years ago — that Mark Frissora, CEO of Hertz Global Holdings, told those attending a Wells Fargo Securities Industrial and Construction Conference that Hertz might spin off Hertz Equipment Rental to focus on its car rental business.

No matter what happens, Hertz Equipment Rental is moving forward. Prior to all the speculation and news report, Lois Boyd, group president of Hertz Equipment Corp., talked with Rental Management about today’s market opportunities, the trend toward specialty branches and the secular shift to renting equipment versus buying.

The opening of The Rental Show 2014 in Orlando, Fla., also is fast approaching and the entire Rental Management editorial team will be there looking for news. If you have a news tip or want to suggest any story ideas, please look for us in our blue Rental Management shirts.

Wayne Walley is editor for Rental Management, the official magazine of the American Rental Association, 1900 19th St., Moline, IL 61265. He can be reached at 800-334-2177, ext. 253, or 309-277-4253; fax 309-764-2747; wayne.walley@ararental.org.




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