United Rentals is acquiring H&E Equipment Services for nearly $5 billion, further increasing its position as the largest North American and global equipment rental house.
United Rentals and H&E agreed to a purchase price of $92 per share in cash, valuing the transaction at approximately $4.8 billion, including $1.4 billion of net debt, according to a release today from United Rentals. The deal, unanimously approved by both companies’ boards, forecasts to close in Q1 2025, following regulatory approvals and a tender offer.
Shares of H&E closed Jan. 13 at $47.48 and gained nearly 88% today to close at $90.29. United Rentals shares gained nearly 6% today to close at $729.86
The acquisition aligns with United Rentals’ strategy to grow its core business, significantly enhancing its fleet with 64,000 units valued at $2.9 billion and broadening its presence in key U.S. regions, according to the release. Cost savings of $130 million, and $120 million in revenue synergies are projected within three years, due to cross-selling specialty products to H&E customers, United Rentals Chief Executive Matthew Flannery said during a Jan. 14 conference call with shareholders and analysts.
“H&E is a well-known rental provider that’s been around for many years,” Flannery said, highlighting “the compatibility of these two companies … is a key aspect of long-term value creation.”
“At United, large M&A is one of our four competencies, and this is another example of where we think we can help a business grow profitably and create more shareholder value.”
Understanding the financials
Financially, the deal reflects a 6.9 x multiple of H&E’s adjusted EBITDA for the trailing 12 months, or 5.8 including synergies and tax benefits, and will be financed, United Rentals Chief Financial Officer Ted Grace said during the call.
“While we have a committed, rich facility that ensures sufficient liquidity to close the deal, our plan is to fund the deal through a pretty straight-forward combination of new debt and [asset-based lending] capacity,” he said. “Looking at the balance sheet for pro forma leverage ratio will be about 2.3 times, which is to say comfortably within our target range of 1 1/2 to 2 1/2 times.”
H&E has 160 branches in more than 30 states, serving construction and industrial markets with 2,900 employees slated to join United Rentals, Flannery said.
Wider rental impact
The acquisition will increase United’s share of the rental market both in North America and globally. Its rental volume in 2023 totaled $12.1 billion making it the largest rental house in North America, according to the RER100, which tracks the largest rental houses by rental volume in North America. H&E, meanwhile, had a rental volume of $1.2 billion, sixth in North America, according to the RER100.
Globally, United Rentals generated total revenue of $14.3 billion in 2023, placing it atop the global IRN100 rental company list, which tracks international rental companies by total revenue. H&E’s revenues totaled $1.4 billion, making it 11th-largest internationally, according to the IRN100.
The acquisition follows years of increased M&A activity by United, including the acquisition of Yak for $2 billion in 2024, which had been the second–largest acquisition in company history.
H&E will enter a 35-day “go-shop” period ending Feb. 17, allowing it to explore superior offers, though no guarantee of alternative proposals, according to the release. Advisers on the transaction include Bank of America Securities for H&E and Morgan Stanley and Wells Fargo for United Rentals.
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