United Rentals to expand U.S. footprint with $4.8bn H&E Equipment Services acquisition
In a move set to redefine the U.S. equipment rental landscape, United Rentals, Inc., the world’s largest equipment rental company, has announced its acquisition of H&E Equipment Services, Inc. The $4.8 billion cash transaction, including $1.4 billion in net debt, underscores United Rentals’ commitment to expanding its service capabilities and geographical reach in high-demand U.S. markets.
The deal, expected to close in the first quarter of 2025, will see United Rentals acquire all outstanding H&E shares at $92 per share. By integrating H&E’s extensive branch network, rental fleet, and experienced workforce, United Rentals aims to enhance its ability to serve a broad customer base while realizing significant financial and operational synergies.
What Does the Acquisition Mean for the Equipment Rental Market?
The acquisition aligns with United Rentals’ long-standing “grow the core” strategy, which focuses on strengthening its service offerings in high-growth geographies. H&E, founded in 1961, operates over 160 branches across more than 30 U.S. states and boasts a rental fleet valued at $2.9 billion. The company’s diverse portfolio includes aerial work platforms, earthmoving equipment, and material handling solutions.
United Rentals CEO Matthew Flannery emphasized the complementary nature of the two businesses, highlighting H&E’s strong operational foundations and shared focus on safety and customer satisfaction. He expressed confidence in the integration process, stating that it would leverage United Rentals’ proven playbook for operational excellence.
Key Financial Impacts and Operational Synergies
This acquisition is poised to deliver compelling financial returns for United Rentals. The $4.8 billion price tag represents a multiple of 6.9x H&E’s adjusted EBITDA over the 12 months ending September 30, 2024, or 5.8x when accounting for anticipated cost synergies and tax benefits.
Key financial highlights include:
Cost Synergies: United Rentals expects to achieve approximately $130 million in annualized cost savings within two years of closing, primarily through streamlined corporate overhead and enhanced operational efficiencies.
Revenue Growth: By the third year, an additional $120 million in annual revenue synergies is projected as H&E’s customers gain access to United Rentals’ specialty rental offerings, including portable storage and trench safety solutions.
Fleet Expansion: The combined fleet will grow by nearly 64,000 units, valued at $2.9 billion, with an average equipment age of under 41 months.
United Rentals’ disciplined approach to debt management remains intact, with the transaction expected to result in a pro forma net leverage ratio of 2.3x at closing. The company has paused its share repurchase program to prioritize debt reduction, aiming for a net-debt-to-EBITDA ratio of 2.0x within a year.
Customer-Centric and Employee-Focused Integration
United Rentals and H&E share a strong commitment to safety and customer satisfaction, making cultural alignment a cornerstone of this acquisition. H&E’s workforce of approximately 2,900 employees will join United Rentals, gaining access to expanded career development opportunities within the larger organization.
H&E’s customers are also set to benefit from the combined company’s enhanced service offerings, including access to United Rentals’ technology-driven solutions and extensive specialty rental portfolio. This integration is expected to elevate the customer experience while driving long-term value for shareholders.
Broader Implications for the Industry
This acquisition reinforces United Rentals’ leadership in the equipment rental market, which is poised for continued growth amid increasing construction and infrastructure investments across the U.S. By combining H&E’s branch network and rental fleet with its own, United Rentals is strategically positioned to capture a larger share of this expanding market.
H&E CEO Bradley Barber expressed confidence in the deal, noting that it provides a “win-win outcome” for customers, employees, and shareholders. He highlighted the potential for H&E’s operational strengths to reach new heights under United Rentals’ stewardship.
The transaction also reflects broader consolidation trends in the equipment rental industry, as leading players seek to enhance operational scale and geographic reach to meet growing demand.
Regulatory and Transactional Details
The boards of both companies have unanimously approved the transaction, which remains subject to regulatory approvals, including the expiration of the Hart-Scott-Rodino waiting period. A 35-day “go-shop” provision allows H&E to explore alternative proposals, though no superior offers are guaranteed.
United Rentals has secured bridge financing to fund the transaction, with plans to utilize a combination of newly issued debt and existing credit facilities. Notably, the acquisition will not impact United Rentals’ existing dividend program.
Expert Insight:
United Rentals’ acquisition of H&E Equipment Services is a strategic masterstroke that positions the company for long-term growth and leadership in the U.S. equipment rental market. By integrating H&E’s robust operations with its own, United Rentals is not only expanding its market presence but also setting new standards for customer service and operational efficiency in the industry.
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