The deal increases Herc’s urban density in seven of the top 10 rental regions. (Herc Rentals)
Herc Rentals has completed its merger with fellow construction equipment supplier H&E Equipment Services, and outbid a key rival in the process.
The $3.9 billion cash-and-stock deal, announced in February, closed June 2. Herc paid $78.75 in cash and 0.1287 shares of Herc Rentals common stock for each H&E share.
Herc ranks No. 4 among equipment rental suppliers, according to Transport Topics data, while Baton Rouge, La.-based H&E ranks No. 5.
“The acquisition of H&E accelerates Herc’s proven strategy and strengthens our position as a premier rental company in North America,” said Herc CEO Larry Silber.
“The addition of H&E’s network and capabilities provides Herc with a leading presence in 11 of the top 20 rental regions, a larger fleet that provides our customers with a range of specialty and general rental products, and a talented team who shares our focus on excellence in customer service and safety. We are excited to realize the substantial upside ahead for industry leading growth and superior value creation,” Silber added.
Herc has completed over 50 acquisitions in the past five years.
Following the latest deal, Herc will have 613 locations across North America, up from 450 locations prior to the H&E acquisition. The combined entity will employ about 10,500 people.
H&E had around 2,900 employees, around 64,000 pieces of rental equipment and about 160 branches in more than 30 U.S. states.
Herc had about 7,600 employees and 453 locations across North America when the deal was unveiled. The deal increases its urban density in seven of the top 10 rental regions.
Size and geographic spread matter in the equipment rental sector, according to analysts, and merging with H&E helps Herc close the gap between itself and the largest player in the segment — United Rentals. Herc, in fact, outbid initial suitor United in the quest to acquire H&E, which must pay United a $63.5 million breakup fee to sever their earlier pact and instead merge with Herc.
When United’s deal with H&E collapsed, the company said it planned to use the funds it would have spent on the partnership to restart its share repurchase program.
“One of our key responsibilities as a management team is to be good stewards of our investors’ capital and our decision not to increase our offer for H&E reflects our commitment to financial discipline,” said United CEO Matthew Flannery.
United initially agreed to pay $3.4 billion in January to acquire H&E.
