H&E shares jump 105% as United Rentals announces $4.8 billion acquisition

H&E Equipment Services (HEES, Financials) stock rose 105.7% to $90.38 at 12:41 GMT-5 following news that United Rentals (URI, Financials) will acquire the company in a ‘a transaction valued at $4.8 billion, including $1.4 billion in net debt.

The boards of directors of both companies unanimously authorized the transaction for $92 per share in cash. Operating 160 stores in 30 U.S. states and managing a rental fleet of $2.9 billion, H&E Equipment Services reported in the release revenue of $1.518 billion and adjusted EBITDA of $696 million for the 12-month period ending September 30, 2024.

United Rentals said the deal fits its expansion plan and increases its fleet by 64,000 units. Within two years, it also projects $130 million in annual savings and $120 million in cross-selling synergies by year three. H&E staff will be integrated into the merger, with the aim of increasing efficiency and providing new business opportunities. This equipment was also included in the H&E equipment services declaration.

As the announcement notes, United Rentals has received bridge commitments and intends to combine a new debt issuance with existing credit capacity to finance the transaction. After the deal, United Rentals expects its leverage to fall to 2.0x EBITDA in twelve months.

The agreement provides for a 35-day “go-shop” period during which H&E may request alternative proposals. Still, the company’s statement doesn’t guarantee a better plan. Subject to legislative approvals and other customary requirements, the agreement is expected to close in the first quarter of 2025.

This article was first published on GuruFocus.