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14.08.2017

Neff gets a better offer

US rental company Neff has received an acquisition proposal from a ‘strategic bidder’ which at $25 cash per share trumps the approved offer it has with H&E by almost four dollars.

The Neff board has determined that the new offer constitutes a “Superior Proposal” as allowed for in its deal with H&E Equipment Services which was estimated to be worth $21.07 a share. Click here to see H&E to acquire Neff

Under that terms of the deal H&E has certain ‘matching rights’, including the right to propose modifications to the terms of the existing deal within five business days of such an offer. Neff is required to negotiate in good faith with H&E during this period, something that it fully intends to do.

If Neff does go with the improved offer it is required to pay a $13.2 million termination fee to H&E, in this case the new bidder has agreed to pay the termination fee on Neff’s behalf. The Neff board has not yet changed its recommendation to support the H&E deal, as at this point there is no assurance that the proposal from the mystery bidder will result in a firm deal.

UPDATE

H&E Equipment Services notified Neff today - August 16th - that it does not intend to raise its acquisition offer, which will permit Neff to terminate the agreement.

H&E chief executive John Engquist said: “We will remain disciplined on the price that we pay for assets. 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.”

Neff responded: "Having received notice that H&E does not intend to modify the terms of the existing merger agreement, the company will now move forward with its discussions with the strategic bidder."

If the alternative offer does go ahead Neff will pay the terminaton fee of $13.2 million to H&E.

Vertikal Comment

An interesting and probably unexpected development, the general consensus among those who might know is that the mystery bidder is Sunstate which since the start of the year has been wholly owned by Sumitomo. The addition of Neff to the business will provide a substantial boost to the earthmoving and non high reach part of the Sunstate fleet.

So will H&E up its offer in the face of a possible deal with another? Tough one to call. Watch this space.

Now we know that H&E will stick with its current proposal it remains to be seen if the mystery buyer comes through and confirms its bid or if a third bidder will arrive on the scene.

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