Penske Offers to Pay $2 Billion for Rollins
The wave of mergers sweeping through trucking came to the industry’s leasing sector Jan. 15, when No. 2 Penske Truck Leasing announced it will buy No. 3 Rollins (RLC) in a $2 billion deal that threatens Ryder System's (R) position as the nation’s largest full-service leasing company.
While Penske termed the acquisition a $754 million deal, Wolfe said he believes that is inadequate because it does not reflect the $1.27 billion in debt owed by Rollins for equipment financing, which Penske will assume. Wolfe said the two numbers should be added to show an “enterprise value” of $2 billion.
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The privately held Penske will pay $754 million in a cash deal and assume Rollins’ $1.27 billion operating debt. Rollins stockowners will receive $13 a share for stock that closed at $8.44 a share Jan. 12, the last trading day before the deal was announced Jan. 15.
The Penske-Rollins combination will have a fleet of 205,000 trucks for lease, compared with 175,000 for Ryder, according to Edward M. Wolfe, lead transportation analyst for Bear, Stearns & Co.
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