Herc Holdings Outbids United Rentals to Acquire H&E; United Agrees to Withdraw From Acquisition Deal
In a move that surprised rental industry participants and observers, Herc Holdings submitted a rival bid to acquire H&E Equipment Services yesterday, and the move was accepted by H&E, which then informed United Rentals it will withdraw from its previous agreement to be acquired by United. The offer, valued at $5.3 billion, including $1.5 billion in debt, was larger in total value than United’s previous bid for $4.8 billion. United Rentals then announced it would not attempt to submit an alternative bid and will accept a $63.52 million payment from H&E, for walking out of the deal.
The unexpected bid from Herc was made possible by an agreed-upon 35-day “go shop” period, which allowed H&E the option to receive alternative offers if chose to do so. The merger of Herc Rentals, No. 3 on the RER 100, and H&E, No. 6 on the listing, creates a significant competitor to industry leaders, United Rentals (No. 1) and Sunbelt Rentals (No. 2).
Herc said it will pay the $63.52 million “breakup fee” for H&E.
“Earlier today, we announced that Herc Rentals made a proposal to acquire H&E Equipment Services,” wrote Herc president and CEO Larry Silber in a filing. “As you may know, H&E previously entered an agreement to be acquired by United Rentals. That merger agreement includes what is known as a 'go-shop' provision, which permits H&E to consider acquisition proposals submitted by other companies. We submitted a proposal as part of that process, and the H&E Board of Directors has deemed our proposal superior and has provided notice to United Rentals that it intends to terminate their agreement and enter into a new merger agreement with Herc. United Rentals notified H&E in writing that it does not intend to submit a revised proposal and has waived its four business day match period under the United Rentals merger agreement.
“Since becoming an independent, public company, Herc Rentals has realized tremendous success. Through organic growth, market share gains, specialty development, greenfield additions and strategic acquisitions, we have significantly scaled our business, having expanded our network and share in key metropolitan areas, in line with our urban market growth strategy. In addition to growing our network, our investments in general rental and specialty equipment offerings, as well as technology, innovation and people, continue to set us apart as one of the leading equipment rental partners for local and national accounts across North America. We have strategies in place which, combined with our operational and service excellence, continue to drive our strong performance and growth ahead of the industry.
“We see the proposed combination with H&E as a path to accelerate our current strategies and growth trajectory. Our business and H&E’s business are highly complementary. Together, we would have a substantially expanded footprint, increased density in key regions with economies of scale, geographic and customer diversification, and a larger, younger fleet to strengthen Herc’s position as a premier rental company in North America. Both companies also share a deep commitment to safety and delivering excellent customer service at every touchpoint, and together we would build on these records.”
A strengthened competitor
H&E has about 160 branches in 30 states, with a rental fleet comprising 64,000 pieces of machinery and a workforce of 2,900 employees. Herc in 2024 had total revenue of $3.568 billion, which, combined with H&E’s will be about $5.2 billion, and create a formidable industry competitor.
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 volume weighted average price as of market close February 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 Silber. "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."
