Herc Holdings Inc., one of North America's leading equipment rental suppliers, and H&E Equipment Services Inc. announced Feb, 19, 2025, 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 Feb. 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 Feb. 14, 2025. Following the close of the transaction, H&E's shareholders will own approximately 14.1 percent of the combined company.
"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 CEO. "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, Financial Benefits
• Increased scale with complementary footprint and fleet mix: The transaction strengthens Herc's position as the third largest rental company in North America. The combined company will have a leading presence in 11 of the top 20 rental regions and increased urban density in seven 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 and ramping to greater than 20 percent as synergies are fully realized. In addition, the transaction 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.
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.
