BATON ROUGE, La. & MIAMI--(BUSINESS WIRE)--Jul. 14, 2017--
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170714005271/en/
Source: H&E Equipment Services, Inc.
H&E Equipment Services, Inc.
Leslie S. Magee, 225-298-5261
Chief
Financial Officer
lmagee@he-equipment.com
or
Kevin
S. Inda, 225-298-5318
Vice President of Investor Relations
kinda@he-equipment.com
or
For
Investors:
Neff Corporation
Mark Irion, Chief Financial
Officer
Brian Coolidge, Director of Financial Reporting
305-513-3350
InvestorRelations@neffcorp.com
or
For
Media:
FTI Consulting
Brian Shiver and Grace Altman
212-850-5683
and 212-850-5602
Brian.Shiver@fticonsulting.com
and Grace.Altman@fticonsulting.com
