United Rentals' Acquisition of RSC Holdings Only Latest in a History of Risk Factors

On 16-Dec-11, United Rentals (NYSE: URI) entered an agreement to acquire RSC Holdings (NYSE: RRR) for an enterprise value of $4.2 billion, including net debt of $2.3 billion. The potential risks and challenges associated with this acquisition take on a different context when viewed through the history of issues that URI has and does face.

As of 28-Sep-11, in response to a Freedom of Information Act request, the SEC confirmed that URI was somehow involved in SEC investigative activity. Additionally, URI has recorded $119 million in restructuring and asset impairment charges since 2008 as well as taking a $1.15 billion goodwill impairment charge in 2008. The goodwill impairment points toward the company's previous acquisitions not living up to expectations while the restructuring charges could be indicative of poor capital allocation.

The executive suite and board have not been particularly stable. There have been 2 CEOs, 2 CFOs, 2 principal accounting officers, and 6 directors since 2007.