H&E Equipment Services Inc. in Baton Rouge is paying $68.6 million to acquire Rental Inc., a nonresidential construction equipment rental company with five branches in Alabama and Florida.
The purchase comes on the heels of a $122.4 million acquisition of a similar company in metro Denver. Both transactions adhere to a smaller-deals strategy H&E Chief Executive Officer John Engquist outlined last year after his company was outbid for Miami-based rental firm Neff Corp. That deal would have been worth $510 million.
Afterward, Engquist said H&E would pursue a strategy of expanding into new markets on its own, with opportunistic acquisitions of smaller companies as a higher and better use of its resources.
"We will remain disciplined on the price that we pay for assets," Engquist said.
The Rental Inc. transaction is expected to be completed during the first quarter.
Rental Inc.'s branches are in Auburn/Opelika and Dothan, Alabama; and Fort Walton Beach, Panama City and Tallahassee, Florida.
The acquisition will significantly improve H&E's ability to serve customers in south Alabama, the Florida Panhandle and western Georgia, all of which are considered expansion or recovering markets, Engquist said.
"While we have recognized success in the markets we serve and established outstanding customer relationships, we believe H&E’s scale and access to capital are significant benefits to both our customers and H&E’s ability to expand its business in this part of the southeastern United States,” said Joe Scherzinger, Rental Inc.'s CEO.
As of November 2017, Rental Inc. generated revenue of $36.4 million over 12 months and its rental fleet size was $35.9 million, consisting of aerial, earthmoving, lifting and general rental equipment. It also is a Bobcat distributor in four of the five locations.
Earlier this month, H&E completed its $122.4 million purchase of Contractors Equipment Center, doubling H&E's branch count to six in Colorado. The deal included CEC's fleet of vehicles, worth $84 million based on original equipment costs.
H&E's stock was down 99 cents, or 2.4 percent, Monday to $40.21 on a down day for the stock market in general.
H&E has 83 full-service facilities providing equipment services throughout the West Coast, Intermountain, Southwest, Gulf Coast, mid-Atlantic and Southeast regions. The company is focused on heavy construction and industrial equipment and rents, sells and provides parts and services support for four core categories of specialized equipment — high-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks.