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United Rentals announces agreement for sale of traffic-control business

United Rentals signs definitive agreement to sell its traffic-control business to HTS Acquisition Inc.

News United Rentals Inc. January 03, 2007
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United Rentals Inc. of Greenwich, Conn., announced that it has signed a definitive agreement to sell its traffic-control business to HTS Acquisition Inc., an entity newly formed by affiliates of private equity investors Wynnchurch Capital Partners and Oak Hill Special Opportunities Fund LP.

Under the terms of the agreement, HTS Acquisition will pay United Rentals $85 million in cash, subject to certain working capital and other adjustments. The transaction, which is expected to close in the first quarter of 2007, is subject to certain customary closing conditions, but is not conditioned upon receipt of any regulatory approvals or purchaser financing.

United Rentals' traffic-control business represents one of the company's three financial reporting segments. In 2005, full-year traffic-control revenues were $270 million, or 8% of total revenues. By comparison, the company's primary business segment--general rentals--reported $3.11 billion of revenues in 2005, or 87% of total revenues.

"The sale of our traffic-control business supports our strategy of focusing our resources on those businesses where we have the greatest opportunities for financial growth and market leadership," Wayland Hicks, chief executive officer for United Rentals, said. "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."

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.