UK industrial equipment rental company Ashtead Group plc (LON:AHT) announced today its US business, Sunbelt Resources, has bought Pride Equipment Corp for $279mln.
Pride provides rental equipment in New York City and surrounding areas, focused in aerial work platforms to the construction, industrial and movie production sectors.
“This acquisition is consistent with our long-term strategy to take advantage of structural growth opportunities through both organic investment and bolt-on acquisitions,” said Ashtead chief executive Geoff Drabble.
Last month the group said it invested £840mln in the rental fleet and a further £196mln on bolt-on acquisitions in the nine months to 31 January.
Ashtead also said strong growth in its core North American market lifted third quarter profits. Profit before tax in the three months ended 31 January edged up to £178.7mln from £139.1mln a year earlier. Rental revenue increased 14% to £729.2mln from £536.9mln, reflecting an increased fleet on rental equipment.
Sunbelt Rentals achieved a 9% increase in rental revenue to $2.7bn from $2.5bn.
Liberum said it expects the acqusition by Sunbelt will be accretive to earnings and cash flow since it will be funded by debt.
"This asset and geographic spread appears to be complementary to Sunbelt’s position, and we would therefore see this acquisition as enhancing its long-term strategy," said Liberum analyst Rahim Karim.
"We continue to see Ashtead as well positioned to take advantage of the structural growth opportunities present in the US rental market and reiterate our 'buy' rating given it offers 20% total return potential."
Shares rose 0.36% to 1,659.0p in morning trading.
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