Herc Holdings and H&E Equipment Services enter into definitive merger agreement
- Acquisition Scales Herc’s Premier Platform and Accelerates Strategy for Industry Leading Growth and Superior Value Creation
- Transaction Terms Same as Proposal Previously Announced on February 18, 2025
- H&E Terminates Agreement with United Rentals
Herc Holdings Inc., one of North America’s leading equipment rental suppliers, and H&E Equipment Services, Inc. d/b/a H&E Rentals (“H&E”)has announced that H&E has terminated its prior merger agreement with United Rentals, Inc. and that Herc and H&E have entered into a definitive merger agreement under which Herc will acquire H&E.
As previously announced on February 18, 2025, under the terms of the Herc and H&E agreement, H&E shareholders will receive $78.75 in cash and 0.1287 shares of Herc common stock for each share they own, with a total value of $104.89 per share based on Herc’s 10-day VWAP as of market close February 14, 2025. Following the close of the transaction, H&E’s shareholders will own approximately 14.1% of the combined company.
Larry Silber, president and chief executive officer
“The acquisition of H&E is a unique opportunity to accelerate Herc’s proven strategy for industry-leading growth and delivering superior shareholder value,” said Larry Silber, Herc’s president and chief executive officer. “We have great respect for the H&E team and the high-quality platform they built. We look forward to welcoming H&E’s talented employees to Herc and working together to realize the substantial benefits that this transaction will create for the shareholders, employees, and customers of both companies.”
John M. Engquist, executive chairman of H&E, added, “This is an outstanding transaction for H&E shareholders, providing both immediate, premium value and the opportunity to participate in the substantial upside value that will be created through this combination. With Herc, we have found a partner who shares our dedication to a higher standard of work.”
Strategic and Financial Benefits
- Increased scale with complementary footprint and fleet mix: The transaction strengthens Herc’s position as North America’s 3rd largest rental company. The combined company will have a leading presence in 11 of the top 20 rental regions and increased urban density in 7 of the top 10 rental regions. In addition, it will have a larger, younger fleet, offering a variety of specialty equipment solutions and a broad range of general rental products.
- Approximately $300 million of annual EBITDA synergies are expected to be achieved by the end of year three following the close of the transaction, including approximately $125 million of cost synergies and approximately $175 million EBITDA impact from revenue synergies.
- Highly accretive: The transaction is expected to be high single-digit accretive to Herc’s cash earnings per share in 2026, ramping to greater than 20% as synergies are fully realized. In addition, it is expected to generate ROIC in excess of Herc’s cost of capital within three years of closing.
- Attractive financial profile: The combination creates a company with revenue and EBITDA of approximately $5.2 billion and $2.5 billion, respectively, with an expectation for continued revenue growth in excess of the market and improved adjusted EBITDA margins.
- Financial strength and flexibility with net leverage of 3.8x at close, prior to synergy realization, and projected to be below 3.0x and in Herc’s targeted range within 24 months of closing. Herc’s dividend will be maintained.
- Valuation multiple re-rating warranted for combined company that is more consistent with comparable company valuation multiples in the sector given the powerful growth platform, increased liquidity, and greater investor interest that comes with a scaled company.
Transaction Details
Herc intends to commence a tender offer to acquire all of the outstanding shares of H&E common stock for $78.75 per share in cash and 0.1287 shares of Herc common stock. Following completion of the tender offer, Herc will acquire all remaining shares not tendered in the offer through a second-step merger at the same price as in the tender offer.
The transaction is expected to close mid-year 2025, subject to the majority of H&E’s shares being tendered into the offer, the receipt of customary regulatory approvals, and closing conditions. Herc has obtained committed financing for the cash portion of the transaction.
In accordance with the terms of H&E’s prior agreement with United Rentals, Herc, on behalf of H&E, has paid a termination fee of $63,523,892 to United Rentals.
