Acquisitions

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

On May 25, 2021, we completed the acquisition of General Finance. General Finance previously operated as Pac-Van and Container King in the U.S. and Canada, and as Royal Wolf in Australia and New Zealand, and was a leading provider of mobile storage and modular office space. Its network served diverse end-markets, including construction, commercial, industrial, retail, transportation, petrochemical, consumer, natural resources, governmental and education. As of March 31, 2021, General Finance’s rental fleet consisted of approximately 100,000 units at an original cost of approximately $650. For the 12 months ending December 31, 2020, General Finance had revenues of $342 (such amount represents General Finance’s historic revenue presented in accordance with our revenue mapping). The acquisition is expected to:

• Complement our leading positions in general construction and industrial rentals and specialty rentals, which will further differentiate us through our ability to deliver value as a one-stop-shop for customers;

• Create immediate cross-sell opportunities, and allow us to introduce mobile storage and modular office solutions in service areas that previously were not served by General Finance; and

• Provide entry into Australia and New Zealand, with an established platform run by a seasoned management team, and with a strong growth strategy already in place.

The aggregate consideration paid to acquire General Finance was $1.032 billion. The acquisition and related fees and expenses were funded through available cash and drawings on our senior secured asset-based revolving credit facility (“ABL facility”).

The following table summarizes the net book values of the assets acquired and liabilities assumed as of the acquisition date. The initial accounting for the acquisition is incomplete. All amounts below could change, potentially materially, as there is significant additional information that we have to obtain to finalize the valuations of the assets acquired and liabilities assumed, and to establish the value of the potential intangible assets, primarily because of the proximity of the acquisition date to the balance sheet date of June 30, 2021.


Cash and cash equivalents	$	13
Accounts receivable, net of allowance for doubtful accounts (1)	44
Inventory	37

Rental equipment	481
Property and equipment	25

Operating lease right-of-use assets	79
Other assets	27
Total identifiable assets acquired	706

Current liabilities	(82)
Deferred taxes	(68)
Operating lease liabilities	(76)

Total liabilities assumed	(226)
Net identifiable assets acquired	480
Goodwill (2)	552
Net assets acquired	$	1,032

(1) The fair value of accounts receivables acquired was $44, and the gross contractual amount was $50. We estimated that $6 would be uncollectible.

(2)All of the goodwill was assigned to our specialty segment. As noted above, we have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of June 30, 2021. As such, we expect that goodwill will change materially from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of General Finance's going-concern value, the value of General Finance's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that would not be available to other market participants. $28 of goodwill is expected to be deductible for income tax purposes.

The three and six months ended June 30, 2021 include General Finance acquisition-related costs which are reflected as “Merger related costs” in our condensed consolidated statements of income. Our results for the three and six months ended June 30, 2021 include $41 of revenue and $7 of pretax income from General Finance.

Pro forma financial information

The pro forma information below gives effect to the General Finance acquisition as if it had been completed on January 1, 2020 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our revenue results had the acquisition been completed on the above date, nor is it necessarily indicative of our future results. The pro forma revenue information reflects General Finance’s historic revenue presented in accordance with our revenue mapping, and does not include any additional revenue opportunities following the acquisition. While pro forma revenue information is presented below, pro forma income information is not presented, as we expect that there will be material adjustments to the values of the assets acquired, including establishing the value of the potential intangible assets, and liabilities assumed, and, as such, we cannot presently provide meaningful pro forma income information. The purchase price allocations for the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. We expect that such valuation changes could be material, primarily because of the proximity of the acquisition date to June 30, 2021. In future periods, we expect to provide pro forma revenue and income information.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
United Rentals historic revenues	$	2,287	$	1,939	$	4,344	$	4,064
General Finance historic revenues	55		84		144		173
Pro forma revenues	$	2,342	$	2,023	$	4,488	$	4,237