Herc Holdings Inc. announced its definitive agreement to acquire H&E Equipment Services, Inc. for a total enterprise value of $4.8 billion in a combination of cash and stock. The combined company is expected to have a combined total enterprise value of over $12 billion, with pro forma revenue and Adj. EBITDA (Synergized) of approximately $5.1 billion and $2.3 billion, respectively, for LTM Q1 2025.
The transaction is expected to be funded with a combination of equity issued to H&E shareholders, a $1 billion draw under an upsized and extended $4,000 million 5-Year ABL Revolving Credit Facility, a $750 million 7-Year Term Loan B, and $2,750 million of new unsecured debt.
As adjusted for the transaction, the company will have pro forma Net First Lien and Synergized Net Leverage of 1.6x and 3.6x, respectively, and LTM Q1 2025 Adj. EBITDA (Synergized) of approximately $2.3 billion. Management is committed to prioritizing deleveraging within Herc’s publicly-stated 2.0x-3.0x net leverage ratio target.
The combined fleet original equipment cost is reported to be $10 billion as of December 31, 2024, with over 600 branches. The transaction is expected to create an increasingly scaled player with substantial synergy opportunity.
The press release also highlights the extended customer diversification, strong asset and collateral coverage, and the opportunity presented by the combined fleet portfolio. Additionally, it mentions the mega project opportunity and the disciplined capital management that the company aims to uphold.
The reconciliation of Herc's net income to Adj. EBITDA and Adj. EBITDA margin for the years 2020-2024 is also provided in the press release. Furthermore, the calculation of the pro forma net leverage ratio is disclosed, showing the company's net debt divided by adjusted EBITDA for the trailing twelve-month period.
Today the company's shares have moved -1.61% to a price of $121.52. If you want to know more, read the company's complete 8-K report here.
