Fort Wayne-based Nesco Holdings Inc. (NYSE: NSCO) says it will acquire Missouri-based Custom Truck One Source in a deal valued at nearly $1.5 billion. Nesco says the combined company will become a one-stop shop provider of specialty truck rental equipment.
Both companies provide specialized truck and heavy equipment services, including rental, sales, and aftermarket parts and service.
“With enhanced scale, a broader set of capabilities and vastly improved financial flexibility, we believe the new company will be distinctively well-positioned to take advantage of the anticipated growth in critical U.S. infrastructure efforts in energy, telecom and rail over the near term and beyond,” said Mark Ein, vice chairman of Nesco.
The acquisition has received unanimous approval from the Nesco Board of Directors and is expected to close in the first quarter of 2021. When the deal is complete, the combined company will be headquartered at the CTOS campus in Kansas City, with “significant operations” being maintained in Indiana.
Nesco says, as part of the acquisition, an affiliate of California-based Platinum Equity LLC has committed to invest more than $850 million in Nesco in exchanged for newly-issued common stock. New York-based The Blackstone Group Inc. (NYSE: BX), the current majority owner of CTOS, will also invest approximately $100 million in exchange for stock.
New Jersey-based Energy Capital Partners and Capitol Investment Corp. in Washington D.C., which together own about 70% of Nesco’s outstanding common stock, will retain their entire ownership positions in Nesco, according to the company.
Nesco says when the deal closes, Platinum will own about 57% of Nesco’s common stock. ECP will own about 10%, while existing CTOS shareholders will own about 7% and Capitol will own about 3%.
The Nesco Board of Directors is expected to be reorganized so Blackstone, ECP and Capitol each have one board seat and Platinum holds majority voting power. Fred Ross, chief executive officer of CTOS, is expected to serve as CEO of the combined company.