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BATON ROUGE, La. - H&E Equipment Services, Inc. (NASDAQ: NASDAQ:HEES), also known as H&E Rentals, has announced that it views the acquisition proposal from Herc Holdings Inc. (NYSE: NYSE:HRI) as a "Superior Proposal" compared to its current merger agreement with United Rentals , Inc. (NYSE: NYSE:URI). The offer from Herc Holdings includes a mix of cash and stock totaling approximately $104.59 per share based on Herc's recent stock price.
The proposal from Herc, which is set to expire at 12:01 p.m. Eastern Time on February 24, 2025, consists of $78.75 in cash and a fixed exchange ratio of 0.1287 shares of Herc common stock for each share of H&E common stock. The offer is contingent on the termination of H&E's existing merger agreement with United Rentals, which H&E is prepared to do, pending the satisfaction of certain conditions anticipated to be met by February 19, 2025.
Upon termination of the merger agreement with United Rentals, H&E is obliged to pay a termination fee of $63,523,892. However, Herc has agreed to cover this fee on H&E's behalf, with the provision that H&E would reimburse Herc under certain circumstances if their merger agreement is also terminated.
United Rentals has been notified of H&E's board's preference for the Herc offer and has waived its right to match the proposal, allowing H&E to proceed with terminating the United Rentals merger agreement. Despite this development, H&E's board has not yet formally changed its recommendation regarding the United Rentals transaction nor has it terminated the agreement.
This news follows the expiration of a 35-day "go-shop" period on February 17, 2025, during which H&E was free to seek alternative acquisition proposals. The company, founded in 1961, is one of the largest rental equipment companies in the U.S., serving various end markets with a fleet that includes aerial work platforms, earthmoving, and material handling equipment.
There is no certainty that the proposed transaction with Herc will occur, or that any other transaction will be consummated. The information disclosed is based on a press release statement and is not intended to be a recommendation to buy, sell, or hold securities.
In other recent news, UBS has downgraded H&E Equipment Services' stock rating from Buy to Neutral, following the company's acquisition by United Rentals. The deal, which surprised both investors and analysts, is viewed as a strategic move by United Rentals to counter slow organic growth due to a flat construction market. UBS analysts believe the acquisition presents a long-term benefit, adding a well-managed business with strategic resources to United Rentals' portfolio.
In related developments, United Rentals and other equipment rental companies are facing market challenges following Ashtead Group (LON:AHT)'s lowered forecast for the year. Baird analyst Mircea Dobre has highlighted a noticeable deceleration in rental demand, indicating that United Rentals could face the highest risk amongst its peers.
These recent developments underscore the changing dynamics in the equipment rental market, with major players such as United Rentals making strategic moves to navigate a potentially slow growth environment. Analysts from UBS and Baird have provided their insights into these changes, highlighting the potential benefits and risks associated with these developments.
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