Platinum Equity and Electro Rent Corporation announced they have entered into a definitive agreement under which Electro Rent would be acquired by Platinum Equity for approximately $323.4 million.
Under the agreement, Platinum Equity would acquire all of Electro Rent’s common stock. Electro Rent stockholders will receive $13.12 per share, representing a premium of 24.4% over the closing price on May 27, 2016, and 34.8% over the average closing price of Electro Rent’s common stock over the past three (3) months. In light of the agreement, Electro Rent will not pay its next quarterly common stock dividend scheduled for July 2016.
The agreement followed the unanimous recommendation of Electro Rent’s board of directors. Completion of the transaction, which is expected to close in the next 90 to 120 days, is subject to customary closing conditions, including approval of Electro Rent’s stockholders and various regulatory agencies.
Electro Rent Chairman Daniel Greenberg and a member of his immediate family, who collectively own approximately 29% of the company’s outstanding shares of common stock, have entered into voting agreements in support of the sale and have granted an affiliate of Platinum Equity irrevocable proxies to execute those agreements.
Steven Markheim, recently named Chief Executive Officer of Electro Rent, and Allen Sciarillo, recently named Chief Financial Officer, will retain their current roles under the ownership of Platinum Equity.
Upon completion of the transaction, Electro Rent’s common stock will cease to be publicly traded. Houlihan Lokey acted as financial advisor to the Strategic Alternatives Committee of the Board of Directors of Electro Rent and Sheppard Mullin acted as Electro Rent’s legal counsel. Latham & Watkins LLP is serving as legal counsel to Platinum Equity.
“Electro Rent has built an excellent reputation as one of the most well respected companies in its industry. Its team of dedicated employees will continue to play an essential role in providing Electro Rent’s customers and OEM partners with the first-class service for which the company is known,” said Platinum Equity Partner Louis Samson. “We look forward to working closely with the company’s experienced leadership to put Electro Rent in the best position to take full advantage of future opportunities.”
“We are excited to begin this new phase in Electro Rent’s history, and look forward to partnering with Platinum as we continue to meet and exceed the needs of our customers and manufacturing partners around the globe,” said Markheim. “The transaction presents an outstanding opportunity for all of our stakeholders, as we should greatly benefit from additional resources and experience to further enhance our already high inventory, service and support standards. Platinum is fully committed to our industry and to ensuring Electro Rent’s success.”