Why United Rentals (URI) Is Climbing on Monday

NEW YORK (TheStreet) -- United Rentals (URI) is climbing on Monday on news it will purchase National Pump and GulfCo.

By early afternoon, shares had added 3.8% to $91.88.

The industrial and construction rental company, the largest in America, said it would acquire the second-largest specialty pump renter in North America for around $780 million. As part of the agreement, the firm will also acquire GulfCo, a general rental business which operates two branches in Texas.

Of the $780 million purchase price, $15 million will be paid in stock and the remainder in cash.

"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," United Rentals CEO Michael Kneeland said in a statement.

The pump rental segment is currently one of the largest and highest-growth specialty markets. United Rentals has been "executing its strategy of expanding its specialty businesses and this acquisition provides another significant product line with attractive margins and returns," it said in the statement.

The deal is expected to close early in the second quarter of 2014, with the addition accretive to United Rentals' free cash flow and EPS this year.

The company updated its fiscal year guidance. The Stamford, Conn.-based business anticipates revenue between $5.45 billion and $5.65 billion. Analysts surveyed by Thomson Reuters previously had forecast $5.42 billion.

Centerview Partners and Morgan Stanley acted as financial advisers to United Rentals, while Sullivan & Cromwell was legal counsel. Fulbright & Jaworski acted as National Pump's legal advisers.

If you liked this article you might like

Irma and Harvey Busted Algos; Probably Done Deals Under Trump: Best of Cramer

Tax Reform Is Coming and That Means Trump Stock Rally Is Ready to Kill It Again

'Trump Stock' Rally Is Back on Track

Market Signals Change of Direction: Cramer's 'Mad Money' Recap (Monday 9/18/17)

Cramer: Irma and Harvey Busted the Algos