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Investing.com -- H&E Equipment Services (NASDAQ:HEES) Inc. has announced that it will be acquired by Herc Holdings (NYSE:HRI) Inc., a U.S.-based equipment rental company, in a deal worth $5.5 billion. The announcement came on February 19, 2025, following a previous offer from United Rentals (NYSE:URI) valued at $5.0 billion. The termination of the agreement with URI resulted in a termination fee of approximately $64 million, which was funded by Herc.
Following the announcement of the acquisition, S&P Global Ratings placed the ’BB-’ issue-level ratings on H&E’s senior unsecured debt on CreditWatch with negative implications. This aligns with the CreditWatch negative on Herc’s unsecured debt. The debt issuance by Herc to fund the acquisition could potentially impact the recovery prospects on its existing senior unsecured debt, which is also rated ’BB-’.
The ’BB-’ issuer credit rating on H&E remains on CreditWatch with positive implications, reflecting S&P Global Ratings’ view that there is a likelihood of at least one-in-two that the rating could be raised following the acquisition by higher-rated Herc. This expectation is based on the belief that Herc will fully integrate H&E into its existing operations after the transaction.
S&P Global Ratings has indicated that it may withdraw its ratings on H&E if the majority of H&E’s existing senior unsecured debt is retired after the transaction is completed. The CreditWatch placement reflects the view that there is a one-in-two likelihood that the issuer credit rating on H&E could be raised by one or more notches when the acquisition closes. This will be possible if H&E is viewed as at least moderately strategic to URI.
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