US machinery rental firm Herc Holdings has surprised the industry by outbidding rival United Rentals to acquire smaller rival H&E Equipment Services for $5.3 billion, excluding debt. The deal, which would combine the world’s third- and fifth-largest equipment rental firms, comes after a 35-day “go-shop” period during which United Rentals had expressed interest in acquiring H&E.
The cash and stock offer valued at $104.59 per share, including $78.75 in cash and 0.1287 shares of Herc common stock, was 20% higher than H&E’s last close on Friday. The deal has been met with positive reactions from analysts, who see it as a bold move that will lead to significant cost cuts and potential growth.
Industry leader United Rentals has dropped the deal after failing to secure a revised proposal from H&E. Analysts attribute this to Herc’s more advantageous offer, which has resulted in H&E choosing the smaller firm over the industry leader. The acquisition is expected to be completed without regulatory hurdles.
The largely fragmented rental machinery industry has been under consolidation for more than a decade. As contractors increasingly find it cost-effective to outsource equipment needs, the demand for rental machinery is growing. Herc’s acquisition of H&E will further solidify its position in the market, allowing it to tap into new opportunities and expand its services.
The transaction includes about $1.5 billion in debt and valued the combined entity at $5.3 billion. Shares of H&E rose 14% following the news, demonstrating the positive sentiment surrounding the deal.
Source: https://www.reuters.com/markets/deals/he-equipment-accepts-herc-rentals-53-billion-buyout-bid-ft-reports-2025-02-18