Neff, H&E walk away from acquisition following higher offer
Chris Hill | August 16, 2017

Neff’s Birmingham, Ala., location.

Update: On Thursday, United Rentals announced that it would buy Neff in a $1.32 billion deal.

H&E Equipment Service’s purchase of Neff Corporation announced in mid-July has ended, following the announcement of a more lucrative offer from another bidder.

The new bidder has offered to purchase Neff for $25.00 per share, a substantial increase over the H&E agreement for $21.07 per share, which came out to roughly $1.2 billion. The new offer could be valued at about $1.4 billion.

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This decision is allowed under the agreement between the two companies under a “go shop” period that would have lasted until Aug. 20. The agreement also called for Neff to “negotiate in good faith” with H&E for a period of five business days if a higher bid was received. H&E waived this negotiation time frame.

H&E CEO John Engquist indicates the company is going to “remain disciplined” on what it pays for “asset purchases” in context of this new development. “We intend instead to pursue an accelerated strategy of greenfield expansion and opportunistic roll-up acquisitions which we believe will be a higher and better use for our resources.”

The agreement also called for Neff to pay a cash fee of $13.165 million for terminating the offer over accepting a higher bidder. Under other circumstances not including a higher bid of terminating the agreement, Neff would have been required to pay a cash fee of $18.430 million. The unnamed higher bidder has agreed to pay the fee, according to Neff officials.

While an official announcement hasn’t been made, KeyBanc Capital Markets Vice President, Equity Research Analyst Joe Box has been cited as indicating Sunstate Equipment Company is likely the new bidder. Sunstate has 64 locations across 10 states concentrated mostly in the southwest from Texas through California.

Neff’s second quarter 2017 financial results showed a 4.5 percent increase in total revenues compared to the same period last year, at $104.1 million. Rental revenues grew by 3.2 percent to $94.4 million, equipment sales increased 28.6 percent to $6.3 million and parts and service revenues were up 6 percent to $3.4 million.

 

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