H&E Equipment Services woke up Tuesday and chose violence—the good kind, if you’re a shareholder. The stock more than doubled in value after United Rentals decided to whip out its checkbook and drop $4.8 billion to acquire the industrial equipment rental company. That’s $92 per share in glorious, cold, hard cash—over 100% higher than H&E’s Monday close. Bigly. 

(Source: Giphy) 

In short, United Rentals, the biggest name in equipment rental (think forklifts, earthmovers, and just about anything else you need to destroy and rebuild your neighborhood), called dibs on all of H&E’s outstanding shares via a tender offer expected to wrap up by January 28. After that, it’ll mop up any stragglers through a second-step merger at the same price. By the time the ink dries in Q1 of 2025, United Rentals will have officially leveled up its fleet game by adding nearly 64,000 shiny new units with an original cost of $2.9 billion.

For those keeping tabs, this deal means H&E is getting slapped with a fat 6.9x adjusted EBITDA tag from the last 12 months—yeah, 6.9, go ahead and giggle if your brain’s still in middle school. The reason for the eye-watering value is due to the fact that H&E raked in a filthy $696 million of EBITDA on top of $1.5 billion in revenue as of September 30, 2024. And if you’re sitting there scratching your head, wondering how on earth United Rentals is justifying this massive pile of cash, here’s why: 

(Source: Stocktwits) 

First off, there’s “synergy” with this deal. Meaning, United Rentals claims the merger will generate $130 million in annual cost savings within two years. In other words, “we’re laying off anyone who’s  redundant, trimming departmental fat, and probably downgrading to some crappy off-brand coffee.” Then there’s an additional $120 million in cross-sell revenue synergies, meaning United Rentals is confident it can upsell H&E’s customers on its broader array of offerings.

For H&E shareholders, this is basically Christmas morning with a side of fireworks. The stock soared to $90.51 during intraday trading, up from Monday’s close of $43.91. That’s a 105% jump for those doing the math, which is frankly absurd in the best way. Meanwhile, United Rentals shares rose nearly 4%, because Wall Street has decided this deal is a win-win situation for everyone involved.

(Source: Yahoo Finance) 

Now obviously, because the equipment rental industry isn’t exactly the sexiest corner of the market, this is even more of a headline maker. Because by swallowing H&E whole, United Rentals isn’t just expanding its fleet—it’s taking a massive corporate dump on key markets, while simultaneously rubbing everyone’s faces in it, cementing its status as the king of a not-so-exciting industry. 

But, but, but… with that said, mergers this size don’t always go off without a hitch. Integrating operations, extracting those thicc synergies, and keeping customers happy is easier said than done. And with $1.4 billion of H&E’s net debt baked into the transaction, United Rentals has to prove it can make this acquisition pay off without overextending itself.

(Source: Giphy) 

Still, for now, it’s all smiles and back slaps. H&E gets a fat payday, United Rentals gets a bigger fleet, and Wall Street gets another reason to keep throwing money at an industry that’s quietly printing cash. Sure, it’s not as exciting as a Tesla product launch or another round of AI hype, but who needs “exciting” when you’ve got forklifts and a $92-per-share payday, amrite?

In the meantime, will the surge continue? Who knows, but it would be wise to continue keeping tabs on both of these stocks going forward. Obviously, be smart and place your bets accordingly, friends. As always stay safe and stay frosty! Until next time… 

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Stocks.News holds positions in Tesla as mentioned in the article.