Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
H&E Equipment Services has accepted a bid of nearly $5.3 billion from HERC Rentals and rejected previous acquisition offers from equipment rental rival United Rentals, according to those who were described on the issue.
People said HERC’s cash and stock bids are nearly $500 million H&E than United’s all-cash offer approved last month. As part of the original United deal, H&E was given a 35-day so-called “go-shop” period, which sought attention from rival bidders and gave HERC the opportunity to dive.
The proposal from HERC values H&E’s shares at approximately $105 each. 75% is paid in cash and the rest is paid in HERC stock. The H&E board of directors recently saw a HERC offer (valued at around $5.3 billion, including $1.4 billion in net debt) outweigh United’s original bid, citing the company $92 per share I concluded that I evaluated it.
GateCrashing’s large-scale rival contract represents a HERC coup as they race to compete with United, the world’s largest supplier of industrial and construction equipment. H&E Takeover adds a network of 160 branches across 30 states, with a rental fleet consisting of 64,000 machines and a labour of 2,900 employees.
When combined with H&E, people said, it strengthens Herc’s position as United’s leading competitor, bringing a significant cost and revenue synergy. United, which earned $13 billion last year, has led a wave of consolidation across the industrial equipment rental sector in recent years. Together, Herc and H&E generated around $5.2 billion in revenue.
People said the Herc, spun from Hertz in 2016, will also be granted to two H&E board seats as part of the proposal. Herc’s acquisition will be financed through a $4.5 billion debt funding led by French bank Crédit Agricole.
United hopes to file counter offers and lose deals until the end of the week, people added. Herc, United, and H&E did not respond immediately to requests for comment.
United’s shares rose almost 6% on the day the deal was announced in January as investors welcomed the acquisition. United’s offer rated H&E at a 100% premium of the closing price.
H&E shares trade at least $4 below United’s bid. This is because antitrust risk of the sector’s dominant players is recognized to take over smaller rivals. United was planning to purchase H&E through its subsidiary.
In response to questions about the growing competition last week if United and H&E combined, HERC CEO Lawrence Silber declined to comment on rival deals, but said, “The integration is good “He said. He added that integration “usually brings about a more stable industry, and this is an important part of our long-term strategy.”
