Nesco to Acquire Custom Truck One Source

Nesco Holdings, Inc. has entered into a definitive agreement to acquire Custom Truck One Source for a purchase price of $1.475 billion. Nesco and CTOS are providers of specialized truck and heavy equipment solutions including rental, sales, and aftermarket parts and service.

The combination will create a one-stop-shop provider of specialty rental equipment serving highly attractive and growing infrastructure end-markets, including transmission and distribution (T&D), the 5G revolution build-out, and critical rail and other national infrastructure initiatives.

With complementary business lines, customer bases and capabilities, the combination is expected to yield significant benefits from increased scale, breadth of product and service offerings and expanded geographic coverage. Following closing, the combined company will have a more attractive financial profile with significantly reduced leverage and enhanced liquidity providing flexibility to address anticipated demand in the large and growing addressable market in which it operates.

In connection with the transaction, an affiliate of Platinum Equity, LLC, has committed to invest more than $850 million into Nesco in exchange for newly issued common stock at a price of $5 per share. In addition, existing CTOS shareholders, including certain funds managed by The Blackstone Group, Inc., in its capacity as the current majority owner of CTOS, and certain members of the CTOS management team, are expected to invest approximately $100 million into Nesco in exchange for newly issued common stock also at the same price as Platinum.

"Since Capitol's investment in Nesco last year, our number one strategic priority has been to find a way to bring these two companies together, given the significant value inherent in the combination. 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, Chairman & CEO of Capitol and Vice Chairman of Nesco. "We are very pleased to partner with Platinum given its deep knowledge and strong track record in the equipment rental industry, as well as the existing CTOS shareholders led by Blackstone. Together with Platinum and our other co-investors and the combined company's Board and management team, we look forward to capturing the meaningful upside opportunities that lie ahead."

Platinum Equity was previously the majority owner of Nesco from 2011 to 2014, and has been a long-time, successful investor in a wide range of specialty rental businesses.

"This is a powerful team of investors coming together to create value," said Tom Gores, Chairman and CEO of Platinum Equity. "We will deploy our industry knowledge and global operating expertise to maximize the potential of this investment."

"We know these companies and the industry extremely well and we have a well-defined playbook for creating value in this space," said Louis Samson, Partner at Platinum Equity. "We also have a deep bench of operations professionals specialized in merger integration and business transformation who will help bring Nesco and CTOS together, building on the best attributes of each. We expect the combination will create a compelling industrial growth company with strong fundamentals and multiple ways to drive EBITDA organically or through additional M&A."