H&E Equipment Drops United Rentals Deal For Herc Holdings' Offer: Details

H&E Equipment Services, Inc. HEES and Herc Holdings Inc. HRI shares are moving on Tuesday.

H&E Equipment Service stated that it received an acquisition offer from Herc Holdings to acquire all of its outstanding shares for $104.89 per share.

The price is based on Herc’s 10-day VWAP as of market close and closing price of $200.74 per share on February 14, 2025.

Herc’s definitive offer includes per share consideration of $78.75 in cash, minus any applicable tax withholding, and a fixed exchange ratio of 0.1287 shares of Herc common stock. 

The offer, which includes a fully negotiated merger agreement and financing commitments, expires at 12:01 p.m. Eastern Time on February 24, 2025.

Also, H&E’s Board has determined that Herc’s cash and stock merger is superior to the $92.00 per share cash sale to United Rentals, Inc. URI. H&E has notified United Rentals that it intends to terminate its merger agreement and enter into a merger agreement with Herc.

Upon the termination of H&E’s agreement with United Rentals and the signing of a definitive merger agreement between Herc and H&E, Herc plans to initiate a tender offer to acquire all outstanding shares of H&E common stock.

The transaction is expected to close in mid-2025, pending the tendering of the majority of H&E’s shares, receipt of customary regulatory approvals, and fulfillment of closing conditions.

Synergies: Herc’s proposal allows H&E’s shareholders to benefit from the $300 million in expected EBITDA synergies by the end of year three after closing and from the anticipated higher valuation multiple for the combined company.

This includes around $125 million in cost synergies and about $175 million in EBITDA impact from revenue synergies. 

The merger is expected to create a company with $5.2 billion in revenue and $2.5 billion in EBITDA, expecting above-market revenue growth and improved margins, with high single-digit cash EPS accretion in 2026 and exceeding 20% as synergies materialize.

United Rentals has acknowledged in writing that it will not submit a revised proposal and has waived its four-business-day match period under the original merger agreement.

Following H&E’s termination of the merger agreement, United Rentals plans to immediately restart its share repurchase program.

As per the terms, if H&E terminates its agreement with United Rentals to merge with Herc, it must pay a $63.52 million termination fees.

As of December 31, 2024, HRI’s net debt stood at $4 billion and liquidity totaled $1.9 billion.

Investors can gain exposure to the H&E Equipment via IShares U.S. Infrastructure ETF IFRA and Avantis US Small Cap Equity ETF AVSC.

Price Action: HEES shares are up 14% at $99.85 & HRI was down 10.9% at $178.80 at the last check Tuesday.

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