H&E Equipment Services (HEES) M&A announcement summary

Deal rationale and strategic fit

• Adds ~160 locations across more than 30 states and 2,900 employees; fleet includes nearly 64,000 rental units with original cost above $2.9B, average age under 41 months, plus ~$230M of non-rental fleet.

• Expands one-stop rental offerings by pairing general rental with specialty equipment, creating cross-selling opportunities across legacy customer bases.

• Strategic fit includes complementary branches and experienced employees, with shared priorities in safety, customer service and profitable growth.

Financial terms and conditions

• Cash offer of $92 per share; $4.8B enterprise value, including $1.4B net debt.

• Purchase price equals 6.9x LTM adjusted EBITDA of $696M through Sept. 30, 2024; adjusted multiple is 5.8x after $130M cost synergies and $54M NPV of tax benefits.

• Base model projects cash-on-cash IRR above 15% and NPV of ~$1.1B; expected to be adjusted-EPS- and free-cash-flow-accretive in year one, with ROIC reaching cost of capital by year three on a run-rate basis.

• Funding planned through new debt and/or borrowings and existing ABL capacity, backed by a committed bridge facility; pro forma net leverage projected at 2.3x versus a 1.5x–2.5x target range.

• Share repurchases paused, with cash redirected toward ~2.0x leverage within 12 months after close; dividend program unchanged.

Synergies and expected cost savings

• Annualized cost synergies of ~$130M targeted within 24 months, primarily from corporate overhead and operations.

• Annual revenue cross-sell benefits of ~$120M targeted by year three; specialty cross-selling expected to ramp after the first six months, with the estimate risk-adjusted and below half of modeled potential.

• ~5% fleet-purchasing advantage expected to lower rental CapEx and capital intensity and benefit free cash flow, rather than EBITDA.