United Rentals boosts equipment capacity with $4.8 billion H&E deal

By Abhinav Parmar and Nathan Gomes

(Reuters) -United Rentals said on Tuesday it would acquire smaller rival H&E Equipment Services in a deal valued at $4.8 billion, as the company looks to tap into demand for equipment rentals in more markets within the United States.

Shares of H&E Equipment were up nearly 106% in early trade, United rose about 5%.

Industrial equipment demand has remained strong from commercial construction firms, on the back of higher government spending on infrastructure and production delays at manufacturers.

Shareholders of H&E will receive $92 per share in cash, United said, representing a 109.4% premium to the stock's last close on Monday.

"We see United Rentals having a meaningful cross selling opportunity by pairing its specialty rental business with H&E's portfolio of general rental equipment targeted," said CFRA Research analyst Jonathan Sakraida.

The deal would help United Rentals capitalize on U.S. reshoring and infrastructure-related construction that is set to continue in 2025, Sakraida added.

The companies added the merger agreement also includes a 35-day "go-shop" period, which allows H&E to seek a competing offer.

Founded in 1961, H&E provides general rental fleet including aerial work platforms, earthmoving equipment, material handling equipment and other general and specialty lines of equipment.

The combination will expand United's rental fleet by almost 64,000 units, the companies said.

United Rentals expects the deal to generate about $130 million of annualized cost synergies within 24 months of closing.

Stamford, Connecticut-based United Rentals, one of the largest equipment rental firms in the world, has reported a rise in its annual revenue over the past three years.

(Reporting by Abhinav Parmar and Nathan Gomes in Bengaluru; Editing by Krishna Chandra Eluri)

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