Herc Swoops in to Outbid United Rentals in Mega Deal to Acquire H&E
The new proposal from Herc offers $105 per share versus the $92 per share United Rentals offered last month.
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A month after news broke that United Rentals would acquire H&E Rentals in a $4.8 billion deal, Herc Rentals has swooped in with a higher offer to acquire H&E Rentals.
Herc Rentals announced February 18 that it had executed a binding acquisition proposal and merger agreement to the H&E Rentals’ board of directors, and the board notified United Rentals it would be accepting Herc's offer. United Rentals has waived its right to submit a revised proposal. Herc is the third-largest equipment rental company in North America, behind United Rentals and Ashtead (Sunbelt Rentals).
The decision to accept the higher offer was possible through a 35-day “go-shop” period included in the original offer from United Rentals, which allowed H&E to solicit and consider better merger offers. The new transaction is expected to close in mid-2025. It amounts to about $5.3 billion including $1.5 billion in debt, according to Reuters.
The new proposal from Herc offers $105 per share versus the $92 per share United Rentals had originally offered last month. This $105 price tag will be paid 75% in cash and 25% in newly issued Herc stock, giving H&E shareholders a 14.1% stake in the combined company. Additionally, two H&E Rentals executives will join the Herc Rentals board.
According to U.S. Securities and Exchange Commission filings, during the go-shop period, H&E Rentals representatives solicited offers from 12 parties and entered confidentiality agreements with two of them.
Herc Rentals
H&E Rentals is required to pay a termination fee of $63 million to United Rentals as a result of accepting a superior offer, which Herc has agreed to pay. H&E Rentals will repay that fee to Herc.
“We are pursuing the proposed combination with H&E from a position of strength and view it as a path to accelerate Herc’s strategy and growth trajectory,” said Larry Silber, Herc Rentals’ president and chief executive officer. “Herc has tremendous respect for H&E and the high quality of the platform and customer centric culture of the organization. This combination would strengthen Herc’s position as a premier rental company in North America.”
“One of our key responsibilities as a management team is to be good stewards of our investors’ capital and our decision not to increase our offer for H&E reflects our commitment to financial discipline,” said Matthew Flannery, chief executive officer of United Rentals. “We remain focused on leveraging our one-stop shop strategy, supported by world-class service and innovative solutions, to help our customers achieve their goals across safety, productivity and sustainability.”
Combining Herc Rentals and H&E Rentals will give the resulting company “leading presence in 11 of the top 20 rental regions” and over 600 locations with a fleet original equipment cost of around $10 billion.
In the latest round of retental company earnings report, Herc reported record fourth-quarter equipment rental revenue of $839 million, while United Rentals reported rental revenue of $3.4 billion.
