United Rentals to acquire H&E in $4.8bn deal

Photo: United Rentals

United Rentals has entered into an agreement to acquire H&E Equipment Services, one of its major competitors, in a deal worth $4.8 billion, including $1.4 billion in net debt.

The acquisition will create a rental business with total 2023 revenues of $15.7 billion, combining the largest and the sixth largest rental businesses in North America.

United Rentals generated $14.3 billion in revenues in 2023 and ranked top of the global IRN100 rental company list, while H&E’s revenues were $1.4 billion and it was 11th in the IRN100.

The deal could increase United Rentals’ North American market share from around 15% to closer to %16.5-17%.

The board of directors of both companies have unanimously approved the transaction, although the agreement includes a 35-day “go-shop” period to 17 February, during which H&E can consider alternative offers.

If concluded, it will give United Rentals more than 160 branches, around 2,765 employees and a 64,000 unit fleet with an original cost of over $2.9 billion. It will also include a non-rental fleet with an original cost of roughly $230 million.

United said the planned merger, which could close in the first quarter of 2025, is consistent with its “grow the core” strategy and will increase its capacity in key US geographies. 

It said H&E customers will benefit from “one-stop access” to its specialty rental offering, including fluid solutions, matting solutions, onsite services, portable storage & modular space, power and HVAC, tool solutions, and trench safety.

It expects to save approximately $130 million each year in cost synergies within 24 months of closing, primarily in the areas of corporate overhead and operations. Additionally, United Rentals expects to see procurement savings of approximately 5% compared to historical H&E pricing.

United said that by year three it could generate an additional $120 million revenues through cross-selling synergies.

Deal to drive revenue growth

Matthew Flannery, chief executive officer of United Rentals, said it is acquiring a well-run operation that’s primed to benefit from its technology, operations and broad value proposition.

He said, “Most importantly, we’re gaining a great team that shares our intense focus on safety and customer service. We’ll be working side-by-side throughout the integration to capitalize on best-in-class expertise from both sides.

“We will use our well-honed integration playbook as we prepare the acquired branches to take full advantage of our systems and operational capabilities, and gain from our employee and customer-centric culture. I look forward to welcoming our new team members upon the closing of the acquisition.”

Flannery continued, “This purchase of H&E supports our strategy to deploy capital to grow the core business and drive shareholder value. This acquisition allows us to better serve our customers with expanded capacity in key markets while also providing the opportunity to further drive revenue through our proven cross-selling strategy.

“Not only does the agreement satisfy the rigorous strategic, financial and cultural standards we set for acquisitions, but it also drives attractive returns for our shareholders.”

Bradley W. Barber, chief executive officer of H&E, added, “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.”

John M. Engquist, executive chairman of H&E, said, “I couldn’t be more pleased with this win-win outcome for both organisations, our customers and our shareholders. Importantly, I want to thank our employees for driving the results that made this transaction possible. I am confident that we’ve found an excellent landing spot for them and I am excited for the new opportunities they will have as part of United Rentals.”

United Rentals said it would make a tender offer by January 28, 2025 to acquire all of the outstanding shares of H&E common stock for $92 per share in cash.

Following completion of the tender offer, United Rentals will acquire all remaining shares not tendered in the offer through a second-step merger at the same price as in the tender offer.