Exhibit 99(a)(8)
99-06-28 Press Room
Atlas Copco to acquire Rental Service
Stockholm, June 28, 1999 - Atlas Copco and Rental Service Corporation have
signed a definitive merger agreement, by which Atlas Copco will acquire
all outstanding shares in Rental Service Corporation at a price of USD 29
per share. Rental Service is one of the largest equipment rental companies
in North America, with 272 locations, operating in 29 states of the United
States and two Canadian provinces. The transaction has a total value of
approximately USD 730 million net equity consideration to Rental Service
Corporation's shareholders (exclusive of approximately USD 900 million net
debt assumed).
According to the agreement, Atlas Copco North America Inc., will commence a cash
tender offer on or about June 29 for all of Rental Service's outstanding shares
of common stock. The agreement also provides for each Rental Service share not
acquired by Atlas Copco in the tender offer to be converted into a right to
receive USD 29 in cash per share in a merger to be completed following
consummation of the tender offer. The boards of both companies have approved the
transaction. The acquisition, which is subject to antitrust approval and other
customary conditions, is expected to close in August.
Rental Service Corporation has been advised by Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Inc. and Xxxxxx Xxxxxxx & Co Inc. that the consideration to be received by
Rental Service's stockholders pursuant to the merger agreement is fair, from a
financial point of view, to the Company's stockholders.
Atlas Copco has been advised by and received a USD 2.0 billion bank commitment
from Credit Suisse First Boston.
Atlas Copco, the owner of Prime Service, Inc., will consolidate its position in
the North American equipment rental business through the acquisition of Rental
Service. The acquisition will result in a number of important synergy gains with
Atlas Copco's existing operations. Increased purchasing power and better
utilization of the rental fleet, combined with certain economies of scale, will
result in even better service to customers. While keeping the operational
integrity of Prime Service and Rental Service distinct, the two divisions should
jointly develop common services such as administration and finance. Importantly,
Rental Service should immediately benefit from better access to, and lower cost
of capital.
"It is a strategic goal for Atlas Copco to increase its revenues from the
use-of-products. By consolidating two of the most well established companies
under the same umbrella, we can offer even better service to our customers in
the fast-growing equipment rental business in North America, " said Xxxxxx
Xxxxxxxxx, President and CEO of the Atlas Copco Group. "The acquisition will
provide for important
synergies with Prime Service and with other companies in the Atlas Copco Group.
However, we will maintain the operational integrity of both Prime and Rental
Service."
Xxxx X. Xxxxxxxx, Chairman of the Executive Committee of Rental Service
Corporation's Board of Directors, added, "We are excited about this opportunity
to join Atlas Copco's worldwide family. We believe we will be able to serve our
customers with the best range of equipment in an even more efficient and
responsive manner. This merger also provides the potential for expanding career
opportunities for our employees as part of a major worldwide organization."
Rental Service, which will continue to operate under its present name, will be a
division in Atlas Copco's Rental Service business area and a sister division to
Prime Service, which does business as Prime Equipment and Prime Energy Systems.
The business area will have annual revenues of more than USD 1.2 billion pro
forma, making Atlas Copco the second largest company in the North American
rental industry. The new area will have more than 100,000 customers, served by
more than 450 stores combined, operating mainly in the industrial and
construction sectors.
The U.S. equipment rental industry is estimated to exceed USD 20 billion in
annual revenues, and during the 1990s has grown at a high rate, driven by an
outsourcing trend as companies have tended to rent more of their equipment. The
industry is fragmented, with the 100 largest companies accounting for less than
22 percent of the total revenue. Consolidation of the industry is under way, and
a number of mergers and acquisitions have taken place in the past few years.
Rental Service is one of the largest companies in the equipment rental industry
in the United States and currently operates 272 rental yards in 29 states, with
some 3,600 employees. The company offers a broad range of products for rent,
including aerial manlifts, compressors and generators, forklifts and light
earthmoving equipment, as well as small equipment such as power tools. Rental
Service had revenues of USD 578 million in 1998 and an operating profit margin
of 17.5 percent. The company has been public since 1996 and has since 1997 been
listed on the New York Stock Exchange. Additional information about Rental
Service is available at the company's web site, xxx.xxxxxxxxxxxxx.xxx.
Atlas Copco is an international group of industrial companies with its head
office in Stockholm, Sweden. In 1998, the Group had revenues of USD 4.2 billion,
with 97 percent of revenues outside Sweden, and more than 23,000 employees.
Atlas Copco companies develop, manufacture, and market electric and pneumatic
tools, compressed air equipment, construction and mining equipment, assembly
systems, motion control products, and offers related service and equipment
rental. Atlas Copco North America Inc., is a subsidiary of Atlas Copco AB. In
July 1997, Atlas Copco acquired Prime Service, Inc. Other well-known North
American companies in the Atlas Copco Group are Milwaukee Electric Tool Company
and Chicago Pneumatic Tool Company. Additional information about Atlas Copco is
available at the Group's web site, xxx.xxxxxxxxxx.xxx, which provides access to
current news about the Company.
This news release contains certain forward-looking statements, including without
limitation, statements concerning Rental Service's operations, economic
performance and financial condition. These forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. Actual results
could differ materially from the results referred to in the forward-looking
statements. These forward-looking statements are based largely on Rental
Service's current expectations and are subject to a number of risks and
uncertainties, including without limitation, changes in external market factors,
changes in Rental Service's business or growth strategy or an inability to
execute its strategy due to changes in its industry or the economy generally,
the emergence of new or growing competitors, various other competitive factors
and other risks and uncertainties indicated from time to time in Rental
Service's filings with the Securities and Exchange Commission. In light of these
risks and uncertainties, there can be no assurance that the results referred to
in the forward-looking statements contained in this news release will in fact
occur. Additionally, Rental Service makes no commitment to disclose any
revisions to forward-looking statements, or any facts, events or circumstances
after the date hereof that may bear upon forward-looking statements.
For further information, please contact:
Xxxxxxx Xxxxxxxxx, Senior Vice President, Controlling, M&A Director.
Phone x00 0 000 0000, mobile x00 00 000 0000, xxxxxxx.xxxxxxxxx@xxxxxxxxxx.xxx
Xxxx Xxx Xxxxx, Senior Vice President, Group Treasurer, (analysts)
Phone x00 0 000 0000, mobile x00 00 000 0000, xxxx.xxx.xxxxx@xxxxxxxxxx.xxx
Xxxxxx Xxxxxxxx, Vice President, Corporate Communications, (media)
Phone x00 0 000 0000, mobile x00 00 000 0000, xxxxxx.xxxxxxxx@xxxxxxxxxx.xxx
