Ashtead is out of reasons to stay in London
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Aimee Donnellan
LONDON, Dec 10 (Reuters Breakingviews) -People who are considering moving to another country often draw up a list of the pros and cons. For $31 billion equipment-rental firm Ashtead AHT.L, it’s hard to think what would have been on the negative side of the ledger.
The company run by CEO Brendan Horgan on Tuesday said it would discuss with shareholders its proposal to move the primary listing to New York from London, a switch it hopes to implement within 18 months. Ashtead is following a well-trodden path. In 2022, $44 billion plumbing supplier Ferguson FERG.N got the ball rolling by switching its London listing to New York. Then last year $68 billion Irish cement giant CRH CRH.N also hopped across the pond, followed by $48 billion gambling firm Flutter Entertainment FLTRF.L.
Investors may wonder why Horgan, who has run the company since 2019, didn’t make the move sooner. After all, Ashtead said it makes about 98% of its operating profit from North America, and most of its senior management are based there, giving it a good chance of one day getting into the widely followed S&P 500 Index .SPX. One possibility is that the company’s historic premium valuation meant there was no catalyst to shake things up. Up until the beginning of this year, Ashtead traded at higher multiple of forward earnings than U.S. rivals United Rentals URI.N and Herc Holdings HRI.N. But that gap has narrowed in 2024, leaving the company on roughly the same rating as $55 billion United.
Horgan has personal reasons to like the change. U.S. companies tend to offer more attractive pay packages than their British counterparts. The median S&P 500 CEO earns nearly $16 million, according to ISS-Corporate analysis, whereas the median FTSE 100 CEO earns under $5 million, Britain’s High Pay Centre reckons. Moreover, if U.S. President-elect Donald Trump cuts taxes on the rich, Horgan could also end up taking home more of his pay packet, which was $7.3 million last year.
Ashtead’s business may also benefit from looking more American. Trump has long championed an “America First” attitude to business and trade policy, suggesting that Ashtead could be better placed to keep winning government contacts if it looked more like a U.S. company.
By comparison, the reasons to stay are insignificant. Perhaps some UK-only investors would lose out if Ashtead eventually ditched its secondary London listing. But that would be more than offset by possible inclusion in the U.S. S&P 500 Index. Ashtead dates back to 1947 and gets its name from a quaint village in Surrey, just outside London. In other words, its links to the United Kingdom are historic and tenuous.
Follow @aimeedonnellan on X
CONTEXT NEWS
UK equipment-rental firm Ashtead is proposing to move its primary listing to New York from London, it said on Dec. 10, as it also warned of lower-than-expected annual earnings due to a weak commercial construction market in the United States.
Ashtead, which makes most of its profits in the United States, said it would discuss the New York listing proposal with shareholders and expects to implement the plan in the next 12 to 18 months.
Ashtead said it had considered several factors including increased exposure to U.S. investors through a primary U.S. listing. It would retain a UK listing in the international companies segment.
Shares in Ashtead were down 10.3% at 56.24 pounds by 0955 GMT on Dec. 10.
Ashtead's waning price-earnings premium https://reut.rs/3Bi2F3T
Editing by Liam Proud and Streisand Neto
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
