Backhoe deal unearths big holes in M&A logic

United Rentals

18/02/2025 17:55

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Jonathan  Guilford
       NEW YORK, Feb 18 (Reuters Breakingviews) - Heavy
equipment supplier H&E abandoned an agreed $4.8 bln sale to
United Rentals for a sweeter offer from rival Herc. The punchy
138% premium led to a 10% drop in the new buyer’s market value.
A sputtering US merger revival also helps exposes a variety of
acquisition pitfalls.

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    CONTEXT NEWS
    H&E Equipment Services said on February 18 that it received
and accepted a rival takeover bid of about $5.3 billion,
including debt, from Herc and terminated the agreed sale to
United Rentals it unveiled on January 14.
    Under terms of the new transaction, Herc will pay $78.75 a
share in cash and 0.1287 shares of Herc stock for each H&E
share, for a total consideration of about $104.59 a share.
United Rentals was slated to pay $92 a share in cash, or $4.8
billion, including debt.
    United Rentals said it would not match Herc’s offer, and
instead withdrew and said it would collect a $63.5 million
termination fee.   
    Guggenheim Securities and Crédit Agricole are advising Herc
while Bank of America is advising H&E.

 (Editing by Jeffrey Goldfarb and Streisand Neto)
 ((For previous columns by the author, Reuters customers can
click on  GUILFORD/  
Jonathan.Guilford@thomsonreuters.com))