United Rentals terminates merger agreement with H&E

Stamford, Connecticut-based United Rentals , Inc. (NYSE:URI), the world’s largest equipment rental company, has terminated its previously announced merger agreement with H&E Equipment Services (NASDAQ:HEES), Inc. The termination was mutually agreed upon on Tuesday, February 19, 2025, as disclosed in a recent SEC filing.

According to the 8-K filing, the agreement and plan of merger, which involved a cash tender offer by United Rentals’ wholly owned subsidiary UR Merger Sub VII Corporation to acquire all outstanding shares of H&E, was withdrawn. This withdrawal coincided with the termination of the merger agreement, making a condition of the offer impossible to fulfill.

Under the terms of the merger agreement, H&E is obligated to pay United Rentals a termination fee of $63,523,892. This fee is in line with the conditions set forth in the agreement, which was initially detailed in United Rentals’ Form 8-K filed on January 14, 2025.

In conjunction with the termination of the merger agreement, the related bridge facility commitment letter has also been terminated. This commitment letter involved several financial institutions, including Morgan Stanley (NYSE:MS) Senior Funding, Inc., Wells Fargo (NYSE:WFC) Securities, LLC, and others, which were to provide financing for the transactions contemplated by the merger agreement.

In other recent news, United Rentals, Inc. announced the termination of its merger agreement with H&E Equipment Services, Inc. The decision was mutually agreed upon, resulting in H&E paying United Rentals a termination fee of approximately $63.5 million.

This follows United Rentals’ withdrawal of its cash tender offer to acquire all outstanding shares of H&E. Meanwhile, Herc Holdings (NYSE:HRI) Inc. has executed a merger agreement with H&E, offering a cash and stock deal valued at $104.89 per share, which was deemed superior to United Rentals’ previous offer.

Raymond (NSE:RYMD) James has maintained its Outperform rating for United Rentals, with a price target of $925. The firm noted United Rentals’ focus on disciplined capital allocation and its strategy to enhance shareholder value through share buybacks. United Rentals plans to resume its share repurchase program, with $250 million remaining under its current authorization and potential for an additional $1.5 billion authorization.

Herc’s acquisition of H&E is expected to generate approximately $300 million in EBITDA synergies by the end of year three and to be significantly accretive to Herc’s cash EPS by 2026. Barclays (LON:BARC) expressed optimism about Herc’s strategic move, highlighting the growth potential despite integration risks.

The transaction, subject to customary regulatory approvals, will result in H&E shareholders owning approximately 14.1% of the combined entity.

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