TRG | The Bottom Line – 2/21

TRG covers three equipment rental companies and in a twist of events, all three were involved in one headline this week. In January, United Rentals (URI) announced an agreement to acquire H&E Equipment (HEES) for $92 per share in cash. This week, Herc Holdings (HRI) announced that they would be acquiring H&E for ~$105 per share in a cash/stock deal. United stated in writing that they would not counteroffer. Ultimately, we believe the expected value accretion to HRI will be relatively greater than URI. Note that URI’s market cap of $45B is 9x larger than HRI’s market cap of $5B. Yet, the year two cost synergy expectation of the two companies was only $5MM apart. Also, Herc’s expected revenue synergy estimate is greater than United’s estimate. We believe that this acquisition strengthens Herc’s already strong position in the industry by giving them greater scale and better and broader go-to-market abilities. Ultimately, we believe this acquisition should enhance shareholder value in the coming years. Herc expects the deal to close in mid-2025.