United Rentals intends to acquire H&E Equipment
United Rentals announced it would acquire smaller rival H&E Equipment Services in a deal valued at $4.8 billion, as the company looks to tap into demand for equipment rentals in more markets within the United States.
“We see United Rentals having a meaningful cross selling opportunity by pairing its specialty rental business with H&E’s portfolio of general rental equipment targeted,” said CFRA Research analyst Jonathan Sakraida.
Based in Stamford, Connecticut, United Rentals is one of the largest equipment rental firms in the world and has reported a rise in its annual revenue over the past three years.
With headquarters in Baton Rouge, La., H&E has approximately 2,900 employees and 160 branches in more than 30 U.S. states.
In its statement about the acquisition news, H&E said the transaction is consistent with United Rentals’ “grow the core” strategy, and legacy H&E customers will benefit from one-stop access to United Rentals’ specialty rental offerings. United Rentals and H&E share many cultural attributes, including a strong focus on safety, a customer-first business philosophy, and best practices for talent development and retention. Critically, H&E employees will bring a wealth of experience to United Rentals, and will have greater opportunities for career development within the larger combined organization.
The combination is expected to generate approximately $130 million of annualized cost synergies within 24 months of closing, primarily in the areas of corporate overhead and operations. Additionally, United Rentals expects to realize procurement savings of approximately 5% as compared to historical H&E pricing.
Matthew Flannery, chief executive officer of United Rentals, said, “In H&E we’re acquiring a well-run operation that’s primed to benefit from our technology, operations and broad value proposition. Most importantly, we’re gaining a great team that shares our intense focus on safety and customer service. I look forward to welcoming our new team members upon the closing of the acquisition.”
Bradley W. Barber, chief executive officer of H&E, said, “I’m extremely proud of what we’ve built at H&E over the last 60 years and am confident that our combination with United Rentals will take the business to new heights going forward.”
The boards of directors of United Rentals and H&E unanimously approved the transaction, which is subject to customary closing conditions, including a minimum tender of at least a majority of then-outstanding H&E common shares and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The merger agreement includes a 35-day “go-shop” period which runs through February 17, 2025, during which H&E—with the assistance of BofA Securities, its exclusive financial advisor—will actively solicit, evaluate and potentially enter into negotiations with, and provide due diligence access to, parties that submit alternative proposals.