United Rentals to Buy H&E Equipment Services for $3.4B

United said the deal was consistent with its “grow the core” strategy. (Luke Sharrett/Bloomberg News)

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United Rentals agreed to buy H&E Equipment Services for $3.4 billion in cash, adding to the Stamford, Conn.-based company’s construction and industrial markets equipment fleet.

United ranks No. 11 on the Transport Topics Top 100 list of the largest private carriers in North America. On the sector list of top equipment rental providers, United ranks No. 1 and H&E No. 5.

H&E has approximately 2,900 employees, around 64,000 pieces of rental equipment and about 160 branches in over 30 U.S. states.

United has about 1,500 rental locations in North America, including in 49 states and every Canadian province. It operates around 2,500 tractors.

On a per-share basis, the deal is worth $92 a share, more than double H&E’s Jan. 13 closing price of $43.94. H&E shares rose more than 100% in the pre-market period and remained there throughout Jan. 14 trading. United’s share price rose about 5% Jan. 14.

Baton Rouge, La.-based H&E operates a general rental fleet that includes aerial work platforms, earthmoving equipment, material handling equipment, and other general and specialty lines of equipment.

“In H&E, we’re acquiring a well-run operation that’s primed to benefit from our technology, operations and broad value proposition. Most importantly, we’re gaining a great team that shares our intense focus on safety and customer service. We’ll be working side-by-side throughout the integration to capitalize on best-in-class expertise from both sides,” United CEO Matthew Flannery said.

United said the deal was consistent with its “grow the core” strategy, and legacy H&E customers would benefit from expanded access to specialty rental offerings in the fluid solutions; matting solutions; onsite services; portable storage and modular space; power and heating, ventilation and air conditioning; tool solutions and trench safety sectors.

Melius Research analysts Rob Wertheimer and Matthew Marottolo welcomed the deal, adding that equipment rental companies were heavily undervalued, and H&E especially, with its share price falling over 33% between early April 2024 and Jan. 13’s close.

“The primary point here is that rental companies can create their own growth, like Walmart of decades ago outcompeting smaller local retailers, or Starbucks displacing smaller coffee shops,” they said.

The analysts noted United Rentals expects to generate around 8% revenue growth at H&E over three years by marketing specialty equipment to H&E’s general rental customers.

“The rental industry of a couple decades ago couldn’t provide the full suite of services; there is too much complexity in managing it for smaller companies, and not enough national or local scale. United Rentals excels at this, and adds value to customers by being able to offer more,” they said.

The analysts also said the deal helps solve a problem for United — how to grow without adding fleet to a slowing market.