Engineering company Atlas Copco AB said Friday it would sell a majority stake in its construction equipment rental business to a pair of U.S.-based private equity firms in a 28 billion kronor (euro3 billion; US$3.8 billion) deal.
The Stockholm-based company said it would sell the stake in the unit, which operates under the brand names Prime Energy and RSC Equipment Rental, to Ripplewood Holdings LLC and Oak Hill Capital Management, adding that the cash proceeds would total some 24 billion kronor (euro2.6 billion; US$3.3 billion).
Once the deal, which is subject to regulatory approval, is complete, Atlas Copco will hold a 14.5 percent minority stake in the business.
"We are very satisfied with the deal. It results in substantial cash proceeds, a capital gain and a minority stake in the best equipment rental company in North America," said Atlas Copco President and Chief Executive Gunnar Brock
Executives with the two private equity firms said the deal would give them a part of a profitable segment.
"RSC Equipment Rental has an extraordinary management team, committed employees and is well positioned in the industry," said Ripplewood Holdings CEO Tim Collins and Denis Nayden, managing partner of Oak Hill Capital. "We are excited about this investment and believe the company's strength gives us an opportunity to continue to grow the business profitably and create long-term value."
Scottsdale, Arizona-based RSC posted sales of 11.5 billion kronor last year. It operates 450 rental stores and employs 5,100 workers across North America.
Brock said Atlas Copco decided to divest the holding because it differed from its focus on industrial equipment operations.
"With three very strong, very profitable industrial business areas, all with leading market positions, Atlas Copco will have excellent opportunities for strong growth and value creation," he said.
Shares of Atlas Copco were up 3 percent to 190.50 kronor (euro20.47; US$26.04) in Stockholm trading.
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