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Acquisitions
 3 Months Ended
Mar. 31, 2019
Business Combinations [Abstract]  
Acquisitions Acquisitions
BakerCorp Acquisition
In July 2018, we completed the acquisition of BakerCorp. BakerCorp was a leading multinational provider of tank, pump, filtration and trench shoring rental solutions for a broad range of industrial and construction applications. BakerCorp had approximately 950 employees, and its operations were primarily concentrated in the United States and Canada, where it had 46 locations. BakerCorp also had 11 locations in France, Germany, the United Kingdom and the Netherlands. BakerCorp had annual revenues of approximately $295. The acquisition:
•Augmented our bundled solutions for fluid storage, transfer and treatment;
•Expanded our strategic account base; and
•Provided a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.
The aggregate consideration paid was approximately $720. The acquisition and related fees and expenses were funded through drawings on our ABL facility.
The following table summarizes the fair values of the assets acquired and liabilities assumed. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.
 Accounts receivable, net of allowance for doubtful accounts (1)
$
74

 Inventory
5

 Rental equipment
268

 Property and equipment
25

 Intangibles (2)
171

 Other assets
4

 Total identifiable assets acquired
547

 Current liabilities
(61
)
 Deferred taxes
(15
)
 Total liabilities assumed
(76
)
 Net identifiable assets acquired
471

 Goodwill (3)
249

 Net assets acquired
$
720

(1) The fair value of accounts receivables acquired was $74, and the gross contractual amount was $81. We estimated that $7 would be uncollectible.
(2) The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:
 
Fair value
 Life (years)
 Customer relationships
$
166

8
 Trade names and associated trademarks
5

5
 Total
$
171

 

(3) All of the goodwill was assigned to our trench, power and fluid solutions segment. The level of goodwill that resulted from the acquisition is primarily reflective of BakerCorp's going-concern value, the value of BakerCorp's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $6 of goodwill is expected to be deductible for income tax purposes.
The three months ended March 31, 2019 include BakerCorp acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income.
Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BakerCorp locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BakerCorp since the acquisition date. The impact of the BakerCorp acquisition on our equipment rentals revenue is primarily reflected in the increase in average OEC of 23.7 percent for the three months ended March 31, 2019. Such increase includes the impact of the acquisition of Vander Holding Corporation and its subsidiaries (“BlueLine”) discussed below.
BlueLine Acquisition
In October 2018, we completed the acquisition of BlueLine. BlueLine was one of the ten largest equipment rental companies in North America and served customers in the construction and industrial sectors with a focus on mid-sized and local accounts. BlueLine had 114 locations and over 1,700 employees based in 25 U.S. states, Canada and Puerto Rico. BlueLine had annual revenues of approximately $786. The acquisition is expected to:
•Expand our equipment rental capacity in many of the largest metropolitan areas in North America, including both U.S. coasts, the Gulf South and Ontario;
•Provide a well-diversified customer base with a balanced mix of commercial construction and industrial accounts;
•Add more mid-sized and local accounts to our customer base; and
•Provide a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.
The aggregate consideration paid was approximately $2.072 billion. The acquisition and related fees and expenses were funded through borrowings under a new $1 billion senior secured term loan credit facility (the “term loan facility”) and the issuance of $1.1 billion principal amount of 6 1/2 percent Senior Notes due 2026.
The following table summarizes the fair values of the assets acquired and liabilities assumed. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.
 Accounts receivable, net of allowance for doubtful accounts (1)
$
117

 Inventory
7

 Rental equipment
1,078

 Property and equipment
71

 Intangibles (customer relationships) (2)
230

 Other assets
41

 Total identifiable assets acquired
1,544

 Short-term debt and current maturities of long-term debt (3)
(12
)
 Current liabilities
(129
)
 Deferred taxes
(7
)
 Long-term debt (3)
(25
)
 Other long-term liabilities
(4
)
 Total liabilities assumed
(177
)
 Net identifiable assets acquired
1,367

 Goodwill (4)
705

 Net assets acquired
$
2,072

(1) The fair value of accounts receivables acquired was $117, and the gross contractual amount was $125. We estimated that $8 would be uncollectible.
(2) The customer relationships are being amortized over a 5 year life.
(3) The acquired debt reflects finance lease obligations.
(4) All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of BlueLine's going-concern value, the value of BlueLine's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $25 of goodwill is expected to be deductible for income tax purposes.
The three months ended March 31, 2019 include BlueLine acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets.
Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BlueLine locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BlueLine since the acquisition date. The impact of the BlueLine acquisition on our equipment rentals revenue is primarily reflected in the increase in average OEC of 23.7 percent for the three months ended March 31, 2019. Such increase includes the impact of the acquisition of BakerCorp discussed above.
Pro forma financial information
The pro forma information below gives effect to the BakerCorp and BlueLine acquisitions as if they had been completed on January 1, 2018 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information includes adjustments to record the assets and liabilities of BakerCorp and BlueLine at their respective fair values based on available information and to give effect to the financing for the acquisitions and related transactions. The pro forma adjustments
reflected in the table below are subject to change as additional analysis is performed. The opening balance sheet values assigned to 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. Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods. The tables below present unaudited pro forma consolidated income statement information as if BakerCorp and BlueLine had been included in our consolidated results for the entire period reflected.
 
Three Months Ended
 
 
March 31, 2018
 
 
United Rentals
 
BlueLine
 
BakerCorp
 
Total
 
Historic/pro forma revenues
$
1,734

 
$
188

 
$
74

 
$
1,996

 
Historic/combined pretax income (loss)
232

 
(22
)
 
(13
)
 
197

 
Pro forma adjustments to pretax income (loss):
 
 
 
 
 
 
 
 
Impact of fair value mark-ups/useful life changes on depreciation (1)
 
 
(18
)
 
(3
)
 
(21
)
 
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)
 
 
(7
)
 
—

 
(7
)
 
Intangible asset amortization (3)
 
 
(19
)
 
(10
)
 
(29
)
 
Interest expense (4)
 
 
(27
)
 
(6
)
 
(33
)
 
Elimination of historic interest (5)
 
 
31

 
10

 
41

 
Restructuring charges (6)
 
 
(13
)
 
(6
)
 
(19
)
 
Pro forma pretax income
 
 
 
 
 
 
$
129

 
(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the BakerCorp and BlueLine acquisitions.
(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the BlueLine acquisition. BakerCorp did not historically recognize a material amount of rental equipment sales, and accordingly no adjustment was required for BakerCorp.
(3) The intangible assets acquired in the BakerCorp and BlueLine acquisitions were amortized.
(4) As discussed above, we issued debt to fund the BakerCorp and BlueLine acquisitions. Interest expense was adjusted to reflect these changes in our debt portfolio.
(5) Historic interest on debt that is not part of the combined entity was eliminated.
(6) We expect to recognize restructuring charges primarily comprised of severance costs and branch closure charges associated with the acquisitions over a period of approximately one year following the acquisition dates, which, for the pro forma presentation, was January 1, 2018. The adjustments above reflect the timing of the actual restructuring charges following the acquisitions (the pro forma restructuring charges above for the three months ended March 31, 2018 reflect the actual restructuring charges recognized during the three months following the acquisitions). We expect to incur additional restructuring charges for BakerCorp and BlueLine, however the remaining costs are not currently estimable, as we are still identifying the actions that will be undertaken.