H&E Equipment Services, Inc. ( HEES ) shares rocketed premarket on Tuesday after the company inked a deal to be acquired by United Rentals, Inc. ( URI ) for around $4.8 billion, including $1.4 billion in net debt.

Transaction Details: The acquisition price of $92 per share in cash represents a premium of around 109% over H&E's trading price as of January 13, 2025.

The acquisition price reflects a 6.9x adjusted EBITDA multiple for the trailing 12 months through September 2024, or 5.8x, including $130 million in cost synergies and $54 million in tax attributes.

United Rentals ( URI ) and H&E's boards have approved the acquisition, which is subject to conditions like a majority tender of H&E shares and antitrust clearance.

United Rentals ( URI ) will begin a tender offer to buy H&E shares for $92 each in cash by January 28, 2025. The deal is expected to close in the first quarter of 2025.

A 35-day "go-shop" period through February 17, 2025, allows H&E to seek and evaluate alternative proposals. H&E can terminate the agreement for a superior offer, but there's no guarantee this will occur.

Synergies & Benefits: United Rentals ( URI ) expects $130 million in annual cost synergies within 24 months, primarily from corporate overhead and operations, along with 5% procurement savings versus historical H&E pricing.

By year three, the company anticipates $120 million in annual revenue synergies from cross-selling to legacy H&E customers.

The acquisition is expected to be accretive to earnings per share and free cash flow in the first year and deliver a strong return on invested capital (ROIC) by year three.

The acquisition aligns with United Rentals' ( URI ) "grow the core" strategy, offering legacy H&E customers expanded access to United Rentals' ( URI ) specialty services, including Fluid Solutions, Matting Solutions, Power & HVAC, and more.

The deal adds nearly 64,000 units to United Rentals' ( URI ) fleet, valued at over $2.9 billion, with an average age of under 41 months, and includes approximately $230 million in non-rental assets.

United Rentals ( URI ) has paused its share repurchase program to focus on this goal.

As of September 30, 2024, United Rentals' ( URI ) cash and cash equivalents stood at $479 million.

Price Action: HEES shares are up 105.55% at $90.32 premarket at the last check Tuesday. URI stock is up 5.20% to $724.99.

Read Next:

3 Best Industrials Sector Picks for Long-Term Investors in 2025