Procore signs multi-year strategic collaboration agreement with AWS
Investing.com -- Shares of Herc Holdings Inc. (NYSE: NYSE:HRI) fell 9.5% following the company’s announcement of a binding acquisition proposal and merger agreement with H&E Equipment Services, Inc. (NASDAQ: NASDAQ:HEES). The market reacted negatively to the news that Herc’s cash and stock merger proposal was deemed superior to a previous offer made by United Rentals , Inc. (NYSE: NYSE:URI).
Herc confirmed the execution of the merger agreement, which offers H&E shareholders $78.75 in cash and 0.1287 shares of Herc common stock per share, valuing the deal at $104.89 per share based on Herc’s 10-day VWAP as of market close February 14, 2025. This represents a 14.0% premium over United Rentals’ $92.00 per share offer. The transaction is expected to result in approximately $300 million of run rate EBITDA synergies by the end of year three following the close and is anticipated to be high single-digit accretive to Herc’s cash EPS in 2026, with the potential to exceed 20% as synergies are fully realized.
Herc’s President and CEO Larry Silber expressed confidence in the acquisition, emphasizing Herc’s growth since becoming independent in 2016 and the strategic enhancements that have positioned the company as a preferred partner across North America. Silber highlighted the transaction as a means to accelerate Herc’s growth trajectory and create value for both Herc and H&E shareholders.
Despite the company’s positive outlook, investors appeared to be concerned about the costs and integration risks associated with the deal. The market’s reaction suggests skepticism about the immediate impact of the acquisition on Herc’s financials.
Barclays (LON:BARC)’ Adam Seiden provided an optimistic perspective, stating, "HERC’s ’over-the-top’ purchase of H&E is the alternative that made sense all along, in our view. Scale doesn’t come cheap, but it’s the growth that investors favor. HRI gets short-term growth in a subdued market, long-term scale quickly in a market with few large assets, and utilizes its undervalued currency in a way that should be valuable for both companies."
The transaction is poised to scale Herc’s platform significantly and is expected to generate a return on invested capital (ROIC) in excess of the cost of capital within three years of closing. Following the transaction’s completion, H&E shareholders will own approximately 14.1% of the combined entity. The deal is subject to customary closing conditions, including regulatory approvals and the approval of H&E shareholders.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.