Herc Holdings Inc. Confirms Acquisition of H&E Equipment Services

On February 18, 2025, Herc Holdings executed a binding merger agreement with H&E Equipment Services, which is set to replace H&E’s previous agreement with United Rentals, Inc. (NYSE: URI). H&E's Board of Directors has determined that Herc's offer is superior to United Rentals’ cash bid of $92.00 per share. Following this decision, H&E has officially notified United Rentals of its intent to terminate their merger agreement.

Under the terms of Herc's proposal, H&E shareholders will receive $78.75 in cash and 0.1287 shares of Herc common stock for each share they own. This totals a value of $104.89 per share, based on Herc's 10-day volume-weighted average price (VWAP) as of February 14, 2025. This proposal represents a 14% premium over United Rentals' offer, allowing H&E shareholders to participate in the potential growth of the newly combined entity.

The acquisition of H&E is expected to significantly enhance Herc's competitive positioning within the equipment rental sector. With the merger, Herc will become the third-largest rental company in North America, expanding its operational footprint and increasing density in key markets. The combined company will operate over 600 locations and manage a fleet with an original equipment cost of approximately $10 billion.

Herc anticipates generating around $300 million in annual EBITDA synergies by the end of the third year post-acquisition. This includes an estimated $125 million from cost synergies and $175 million from revenue synergies. Herc's strategy aims to leverage these synergies to enhance profitability and support sustainable growth through various market cycles.

The merger is projected to result in a combined revenue of approximately $5.2 billion and an EBITDA of $2.5 billion. The acquisition is expected to be accretive to Herc's cash earnings per share, with estimations of high single-digit accretion in 2026, ramping up to over 20% as synergies are fully realized. The company also plans to maintain a prudent capital structure, targeting a net leverage ratio below 3.0x within two years of closing.

Larry Silber, Herc’s President and CEO, emphasized the strategic importance of the acquisition, stating, “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.” He expressed confidence in the potential for enhanced customer service and operational efficiencies resulting from the merger.

Silber further noted that the combination would unlock substantial opportunities for both Herc and H&E shareholders, reinforcing Herc's disciplined approach to mergers and acquisitions.

The transaction is expected to close in mid-2025, pending the tendering of a majority of H&E’s shares and customary regulatory approvals. Herc has secured a financing commitment from Credit Agricole for this acquisition, ensuring a smooth transaction process.

Herc has engaged several advisors for this acquisition, including Guggenheim Securities, LLC as the lead financial advisor and Simpson Thacher & Bartlett LLP as the legal advisor. The strategic communications will be managed by Joele Frank, Wilkinson Brimmer Katcher.

The proposed acquisition of H&E Equipment Services by Herc Holdings marks a pivotal moment in the equipment rental industry. By enhancing scale, increasing market presence, and unlocking synergies, this merger is set to propel Herc into a new era of growth and profitability. As the transaction progresses, stakeholders will be keenly observing how this strategic move reshapes the competitive landscape of the rental market in North America.

For further updates, Herc Holdings will host a call and webcast on the day of the announcement, providing insights into the merger’s implications and future outlook.