HE EQUIPMENT SERVICES acquired by UNITED RENTALS

United Rentals agreed on 14 January 2025 to acquire H&E Equipment Services at an enterprise value of $4.8B, an EV/EBITDA multiple of 6.9x on H&E’s trailing twelve-month adjusted EBITDA, or less once targeted cost synergies and the net present value of tax attributes are taken into account. H&E generated revenue of and an EBITDA of over that period, an EBITDA margin of . The deal was structured as an all-cash tender offer followed by a second-step merger at the same price, and both boards approved it unanimously. At the time of the deal, H&E operated a rental fleet of almost 64,000 units with an original cost of more than $2.9 billion and an average age below 41 months, alongside roughly $230 million of non-rental fleet, employed about 2,900 people and ran branches in more than 30 states. United Rentals expected around $130 million of annualised cost synergies within 24 months of closing, mainly in corporate overhead and operations, and about $120 million of annual revenue synergies by the third year, as H&E customers gained access to its specialty rental lines. It expected the deal to add to adjusted earnings per share and free cash flow in the first year, with return on invested capital reaching its cost of capital on a run-rate basis by the end of year three. Pro-forma net leverage at closing was projected at about 2.3 times, within the company’s target range, and United Rentals paused its share buyback programme to bring it down towards 2.0 times within twelve months. The purchase was not conditional on financing: the company secured bridge commitments from Morgan Stanley Senior Funding and Wells Fargo, and planned to fund it with newly issued debt, borrowings or its asset-based lending facility. Completion was subject to a majority of H&E shares being tendered and to the expiry of the waiting period under the Hart-Scott-Rodino Act, with closing expected in the first quarter of 2025. The merger agreement included a 35-day go-shop period running to 17 February 2025, during which H&E could solicit alternative proposals through BofA Securities, its financial adviser. Sullivan & Cromwell advised United Rentals and Milbank advised H&E on legal matters.

The acquisition of He Equipment Services is part of the growth strategy of United Rentals, which already has several external growth operations under its belt, notably Yak Access in 2024.