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Herc Holdings (NYSE:HRI) just made a power move. The equipment rental giant has outbid United Rentals (NYSE:URI) in a heated takeover battle for H&E Equipment Services (NASDAQ:HEES), locking in a $104.89 per share cash-and-stock offer that H&E's board has deemed superior. With United Rentals stepping aside, the stage is set for Herc to absorb H&E, creating a rental powerhouse with greater market reach, a younger fleet, and a stronger position in key regions. The deal puts Herc in pole position as the third-largest rental company in North America, giving it a major competitive edge in serving national accounts and high-value projects.
And the financial upside? Massive. Herc expects the merger to generate about $300 million in EBITDA synergies within three years, significantly boosting shareholder returns. The acquisition is projected to be high single-digit accretive to Herc's cash EPS in 2026, ramping past 20% as efficiencies kick in. With a combined revenue of $5.2 billion and EBITDA of $2.5 billion, the deal strengthens Herc's ability to outpace industry growth while unlocking serious value. Investors could also see a re-rating of Herc's valuation multiple as the combined entity scales up, improving liquidity and market positioning.
Herc's leadership isn't just playing defenseit's going all in on growth. CEO Larry Silber sees this as a transformative step, reinforcing Herc's track record of disciplined acquisitions and market leadership. With regulatory approvals expected by mid-2025, the company is set to accelerate expansion, capitalize on the growing rental trend, and solidify its place as a dominant force in the industry. For investors, this isn't just another dealit's a calculated play to create a rental behemoth built for long-term success.
This article first appeared on GuruFocus.