S&P 500 equipment rental leader United Rentals announced early Tuesday it has agreed to acquire H&E Equipment Services for $4.8 billion, including $1.4 billion in debt.
United Rentals intends to commence a tender offer by Jan. 28, to acquire all of the outstanding shares of H&E common stock for $92 per share in cash. Following completion of the tender offer, United Rentals will acquire all remaining shares not tendered in the offer through a second-step merger at the same price as in the tender offer. The transaction is expected to close in the first quarter, according to regulatory filings.
The S&P 500 company reported it has "obtained bridge commitments" to close the deal quickly and that it expects to use a combination of newly issued debt or borrowing to fund the transaction.
United Rentals announced it has paused its share repurchase plan as it looks to balance its leverage within 12 months of closing. However, the S&P 500 component added the transaction will not affect the company's current dividend program.
Through the end of Q3, United Rentals repurchased $1.125 billion of common stock and paid dividends totaling $326 million in 2024. At the beginning of the fourth quarter it had been United Rentals' intention to repurchase a total of $1.5 billion in stock during 2024. This means, URI is pausing its share repurchase program $375 million short of its full-year target.
S&P 500: United Rentals Stock
"This purchase of H&E supports our strategy to deploy capital to grow the core business and drive shareholder value," United Rentals Chief Executive Matthew Flannery said in the press release Tuesday.
"This acquisition allows us to better serve our customers with expanded capacity in key markets while also providing the opportunity to further drive revenue through our proven cross-selling strategy," Flannery added.
The combination is expected to generate approximately $130 million of annualized cost synergies within two years of closing, primarily in the areas of corporate overhead and operations, according to URI.
United Rentals stock, a S&P 500 component, jumped 5.9% to 729.93 during market action on Tuesday, after gaining 2.7% to 689.15 on Monday. Meanwhile, HEES stock jumped 105.5% to 90.29 on Tuesday.
URI gained 23% in 2024, but has declined 23% from its high of 896.98, which it hit on Nov. 11. Analyst consensus projects single digit earnings and revenue growth in the first half of the 2025, according to FactSet.
URI stock has a 66 Composite Rating out of a best-possible 99. The S&P 500 stock also has a 41 Relative Strength Rating and an 83 EPS Rating.
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