Memo to CEOs: enjoy the M&A fervor while it lasts

United Rentals

15/01/2025 17:26

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Jeffrey Goldfarb
       NEW YORK, Jan 15 (Reuters Breakingviews) - A fresh rush
of activity is receiving an uncommonly warm welcome from
investors trusting acquisitive bosses to create value. Even
United Rentals’ $5 bln deal, which leans on hazier promises to
lift sales, got a thumbs-up. As the trend emboldens more buyers,
leeriness will return.
       
    Full view will be published shortly.
    Follow @jgfarb on X
    
    CONTEXT NEWS
    United Rentals said on Jan. 14 that it had agreed to buy
rival H&E Equipment Services for $4.8 billion, including debt,
which led to a nearly 6% rise in the acquirer’s stock price on
the day.
    Under the terms of the transaction, United Rentals is paying
$92 a share in cash, a 109% premium to where H&E’s shares closed
on Jan. 13. The company expects to generate $130 million of
annual cost savings and $120 million of revenue uplift from the
deal.
    Morgan Stanley and Wells Fargo are providing United Rentals
with bridge financing while Bank of America is advising H&E.

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