H&E Equipment Services, Inc. (NASDAQ: HEES) and Neff
Corporation (NYSE: NEFF) today announced that they have entered
into a definitive merger agreement under which H&E Equipment
Services (“H&E”) will acquire Neff Corporation (“Neff”). Under
the terms of the agreement, which has been unanimously approved by
the boards of directors of both companies, H&E will pay $21.07
in cash per share of Neff common stock, for a total enterprise
value of approximately $1.2 billion, including approximately $690
million of net debt. The per share merger consideration payable to
Neff stockholders is subject to certain downward adjustments, not
to exceed $0.44 per share, in the event that H&E incurs certain
increased financing costs due to the transaction not being
consummated on or prior to January 14, 2018. The transaction is
expected to close in the late third quarter or early fourth quarter
of 2017, and is subject to customary closing conditions including
Hart-Scott-Rodino Act clearance.
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John Engquist, H&E’s Chief Executive Officer, said, “This
agreement accelerates our stated strategy to expand our footprint
across the United States as we seek to penetrate and grow our
business in strategic business segments. Further, this transaction
will bring together what we believe to be two highly complementary
businesses that share a commitment to addressing the increasingly
complex equipment needs of our customers. Our broader geographic
footprint and enhanced capabilities in strategic markets, coupled
with complementary expertise across equipment categories, are
expected to help us to achieve our growth goals. We look forward to
welcoming Neff’s talented employee base to the H&E family, and
to offering more coverage and capabilities to support our combined
customer base.”
Graham Hood, Chief Executive Officer of Neff, commented, “We are
looking forward to joining an industry leader who shares our core
values, including our commitment to providing customers with
best-in-class equipment services and solutions. Neff offers H&E
a talented, experienced and knowledgeable employee base that we
expect will continue to maintain and develop relationships with key
customers and contribute to the combined company’s growth. I would
like to thank our 1,160 employees across the country, who are the
driving force behind our business. Today’s announcement is a
testament to the value that they have helped to create for our
stakeholders.”
Strategic Rationale
- Scale – The acquisition will nearly double
the number of H&E branches, from 78 to 147, within H&E’s
existing footprint in the strategically important Gulf Coast,
Mid-Atlantic, Southeast and West Coast regions. Both H&E’s and
Neff’s customers will benefit from best-in-class practices and a
wide range of equipment in more locations.
- Fleet – As of March 31, 2017, the
companies’ combined fleet totaled $2.2 billion based on original
equipment cost (OEC) and consisted of 43,749 units. The addition of
Neff’s fleet will be highly complementary to H&E’s
concentration in aerial work platform equipment and the combined
company will possess one of the largest earthmoving rental fleets
in the industry. As of March 31, 2017, the earthmoving fleet of
H&E and Neff on a combined OEC basis totaled $727 million and
consisted of 8,736 units. The increased geographic expansion and
density is expected to allow H&E to better position fleet to
regional pockets of higher demand and improve overall
utilization.
- Increased
Non-Residential Construction Penetration and End-User Market
Diversification – The transaction is expected to
increase H&E’s penetration in the non-residential construction
market. With a significantly larger earthmoving fleet, we believe
H&E will be well-positioned to gain from any future
governmental infrastructure spending initiatives and will also have
a broader exposure to new regional and local customers in the
construction markets generally. H&E believes that the
earthmoving segment is an under-penetrated segment that may afford
enhanced growth opportunities.
- Employees and
Culture – Neff employees will bring significant industry
expertise to H&E, where they will have the opportunity for
further career development and advancement in the significantly
larger combined company. Both companies share the same
best-in-class commitment to customer service and safety.
Transaction Highlights
- H&E estimates the acquisition will
create $25 to $30 million of synergies annually related to
corporate overhead, systems and operational efficiencies, as well
as scale benefits for equipment purchases.
- The acquisition of Neff is expected to
generate in excess of $800 million of gross tax assets for H&E
arising from a step-up in the basis of certain of Neff’s
assets.
- Wells Fargo Bank and affiliated
entities have agreed to provide committed financing for the
transaction, subject to customary conditions. The transaction is
not subject to a financing condition.
- Private investment funds managed by
Wayzata Investment Partners LLC holding approximately 62.7% of the
outstanding common shares of Neff have executed a written consent
to approve the transaction, thereby providing the required
stockholder approval for the transaction.
- The merger agreement includes a
“go-shop” period which runs through August 20, 2017 during
which the special committee of Neff’s board of directors, with the
assistance of its financial and legal advisors, may solicit
alternative proposals to acquire Neff. There can be no assurance
that this process will result in receipt of a superior offer or
that any other transactions will be approved or consummated.
Conference Call
H&E’s management will hold a conference call to discuss the
Neff acquisition on Tuesday, July 18, 2017. Specific details
regarding the meeting will be provided in advance of the conference
call.
Wells Fargo Securities, LLC acted as financial advisor to
H&E and Dechert LLP acted as H&E's legal advisor. Deutsche
Bank Securities Inc. and Akin Gump Strauss Hauer & Feld LLP
served as advisors to the special committee of Neff’s board of
directors.
About H&E Equipment Services, Inc.
H&E is one of the largest integrated equipment services
companies in the United States with 78 full-service facilities
throughout the West Coast, Intermountain, Southwest, Gulf Coast,
Mid-Atlantic and Southeast regions. H&E is focused on heavy
construction and industrial equipment and rents, sells and provides
parts and services support for four core categories of specialized
equipment: (1) hi-lift or aerial platform equipment; (2) cranes;
(3) earthmoving equipment; and (4) industrial lift trucks. By
providing a multitude of services including equipment rental,
sales, on-site parts and repair and maintenance, H&E is a
one-stop provider for its customers' varied equipment needs. This
full service approach provides H&E with multiple points of
customer contact, enabling it to maintain a high quality rental
fleet, as well as an effective distribution channel for fleet
disposal and provides cross-selling opportunities among its new and
used equipment sales, rental, parts sales and services
operations.
About Neff Corporation
Neff is a leading regional equipment rental company in the
United States, focused on the fast growing Sunbelt States. Based in
Miami, FL, the company offers a broad array of equipment rental
solutions for its more than 15,000 customers, focusing on key end
user markets including infrastructure, non-residential
construction, energy and municipal and residential construction.
Neff has 69 branches, approximately 1,160 employees and a broad
fleet of equipment, including earthmoving, material handling,
aerial and other rental equipment to meet specific customer
needs.
Forward-Looking Statements
Statements contained in this press release that are not
historical facts, including statements about H&E’s or Neff’s
beliefs and expectations, are forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
include statements preceded by, followed by or that include the
words “may”, “could”, “would”, “should”, “believe”, “expect”,
“anticipate”, “plan”, “estimate”, “target”, “project”, “intend”,
“foresee” and similar expressions, as well as other statements,
including statements about the anticipated benefits to H&E and
Neff from the merger, H&E’s and Neff’s anticipated financial
and operating results, the impact of the merger on H&E’s
earnings and capital structure and H&E’s and Neff’s respective
plans, objectives and intentions. All forward-looking statements
are subject to risks, uncertainties and other factors that may
cause the actual results, performance and achievements of H&E
and Neff to differ materially from the anticipated results
expressed or implied by any forward-looking statements. These
risks, uncertainties and other factors include, among others: (1)
the risk that the savings and synergies anticipated from the merger
are not realized or take longer than anticipated to be realized;
(2) disruption or reputational harm as a result of the merger with
H&E’s or Neff’s customers, suppliers, employees or others
business partner relationships; (3) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement, the failure of the closing
conditions included in the merger agreement to be satisfied (or any
material delay in satisfying such conditions), or any other failure
to consummate the transactions contemplated thereby, including in
circumstances in which one party would be obligated to pay the
other a termination fee or other damages or expenses; (4) the risk
of unsuccessful integration of H&E’s and Neff’s businesses, or
that such integration will be materially delayed or will be more
costly or difficult than anticipated; (5) the amount of the costs,
fees, expenses and charges related to the merger; (6) the ability
to obtain required governmental approvals of the proposed merger,
including approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976; (7) any additional costs related to the
merger or the other transactions contemplated thereby as a result
of unexpected factors or events; (8) the significant indebtedness
of the combined company, including the indebtedness incurred in the
proposed financing of the merger; (9) any negative effects of this
announcement or the consummation of the merger, the proposed
financing thereof or any of the other transactions contemplated
thereby on the market price of H&E’s or Neff’s common stock or
other securities; (10) the diversion of management time on
transaction-related issues; (11) other business effects, including
the effects of general industry, market, economic, political or
regulatory conditions, future exchange or interest rates or changes
in tax laws, regulations, rates and policies, including the
uncertainty regarding rules and regulations with respect to the
foregoing that may be affected by the United States Congress and
Trump administration; and (12) the expected business outlook,
anticipated financial and operating results generally. For a more
detailed discussion of some of the foregoing risks and
uncertainties, see H&E’s and Neff’s respective Annual Reports
on Form 10-K and other reports and other documents filed with the
U.S. Securities and Exchange Commission. Forward-looking statements
are only predictions and are not guarantees of performance. These
statements are based on the current beliefs and assumptions of
H&E’s and Neff’s management, which in turn are based on
currently available information and important, underlying
assumptions. H&E and Neff are under no obligation to publicly
update or revise any forward-looking statements after this press
release, whether as a result of any new information, future events
or otherwise. Investors, potential investors, security holders and
other readers are urged to consider the above mentioned factors
carefully in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking
statements. Although H&E and Neff believe that the expectations
reflected in the forward-looking statements are reasonable, they
cannot guarantee future results or performance, including the
consummation of the transactions contemplated by the merger
agreement or the proposed financing thereof or any anticipated
effects of the merger.
Additional Information and Where to Find It
In connection with the proposed acquisition, Neff intends to
prepare an information statement in preliminary and definitive form
for its stockholders containing the information with respect to the
proposed merger specified in Schedule 14C promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and describing the proposed merger. Neff’s stockholders are urged
to carefully read the information statement regarding the proposed
merger and any other relevant documents in their entirety when they
become available because they will contain important information
about the proposed acquisition. You may obtain copies of all
documents filed with the SEC regarding the proposed merger, free of
charge, at the SEC’s website, http://www.sec.gov, or on the
Investor Relations section of Neff’s website (www.neffrental.com),
or by directing a request to Neff by mail or telephone as set forth
above. Investors are also urged to read the current reports on Form
8-K to be filed by each of H&E and Neff regarding the proposed
merger, which will also contain important information.
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version on businesswire.com: http://www.businesswire.com/news/home/20170714005271/en/
H&E Equipment Services, Inc.Leslie S. Magee,
225-298-5261Chief Financial Officerlmagee@he-equipment.comorKevin
S. Inda, 225-298-5318Vice President of Investor
Relationskinda@he-equipment.comorFor Investors:Neff
CorporationMark Irion, Chief Financial OfficerBrian Coolidge,
Director of Financial
Reporting305-513-3350InvestorRelations@neffcorp.comorFor
Media:FTI ConsultingBrian Shiver and Grace Altman212-850-5683
and 212-850-5602Brian.Shiver@fticonsulting.com and
Grace.Altman@fticonsulting.com
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