Herc (HRI) M&A Announcement summary

Deal rationale and strategic fit

• Accelerates growth strategy by expanding geographic footprint, increasing density in key regions, and enhancing customer and fleet diversification, creating a larger and younger fleet.

• Combined company will be the third-largest rental company in North America, with a leading presence in 11 of the top 20 rental regions and increased urban density.

• Combines complementary branch networks and leverages over 120 years of industry experience, with a shared commitment to customer service and safety.

• H&E's strong presence in high-growth U.S. regions and premium fleet complements Herc's specialty offerings and national reach.

Financial terms and conditions

• H&E shareholders to receive $78.75 in cash and 0.1287 shares of Herc stock per share, totaling $104.89 per share based on Herc's 10-day VWAP as of Feb 14, 2025; 75% cash and 25% stock consideration.

• Represents a 14% premium to United Rentals' $92 per share offer.

• H&E shareholders will own approximately 14.1% of the combined company upon closing.

• Transaction funded by $4.5 billion in new debt and ABL availability; Herc has secured fully committed financing and all H&E debt will be refinanced.

• No financing condition for closing; Herc has a debt commitment letter.

Synergies and expected cost savings

• $300 million incremental EBITDA expected by end of year 3, including $125 million in cost synergies and $175 million in revenue synergies.

• Cost synergies from consolidating corporate functions, eliminating duplicative costs, and operational scale.

• Revenue synergies from cross-selling specialty fleet, leveraging broader product offerings, and technology-enabled solutions.

• High free cash flow conversion anticipated due to lower capital requirements for synergy realization; incremental run-rate capex only 15% of incremental EBITDA.

• Specialty solutions expected to deliver 800 basis points higher margin than general rental.