Equipment rental acquisitions rise as megaprojects strengthen rental demand

Equipment rental companies continue turning to the mergers and acquisitions market to keep up with strong demand amid national and international megaprojects. 

The Ashtead Group, which operates equipment rental company Sunbelt Rentals, added106 locations through acquisitions and opening new locations and saw rental revenue and used equipment sales grow year over year during its fiscal third quarter, according to its earnings release. 

During the first nine months of fiscal 2024, which ended Jan. 31, Sunbelt Rentals: 

• Added 106 locations in North America, including 26 bolt-on acquisitions;  
• Saw rental revenue rise to $6.3 billion, up 11.8% YoY; 
• Saw used equipment sales grow to $635.9 million, up 59.9% YoY; 
• Witnessed last-12-month dollar utilization decline to 60%, down 300 basis points (bps) YoY. 

Activity in the United States equipment rental market appears set to bolster Sunbelt Rentals and the industry going forward, Ashtead Chief Executive Brendan Horgan said during the company’s March 5 earnings call.  

“We’re experiencing strong demand for our products and services and gaining improved clarity to the strength of our end markets throughout the year into 2025 and beyond, driven in part by the recent realities of U.S. onshoring, technology, and manufacturing modernization and federal legislative acts,” he said. “These actualities add to what was already a strong underlying level of end-market activity, flushed with day-to-day MRO, small to midsize projects, and the very present and growing megaproject landscape.”

Rise of the megaprojects

Megaprojects consist of large-scale, complex construction and infrastructure investment initiatives that often last several years and cost hundreds of millions of dollars, according to the Oxford Handbook of Megaproject Management. 

Ashtead Group invested $3.5 billion across existing locations and greenfields, up 34.6% YoY, according to the company’s earnings release. Ashtead Group also invested $906 million in bolt-on acquisitions, down 6.6% YoY. 

The growth of the Ashtead Group and Sunbelt Rentals comes as the megaprojects continue to push durable goods and equipment demand, according to a note from business research firm Melius Research. 

“Megaprojects provide visibility and stability unlike anything in the past several decades, reducing risk, provided Ashtead can manage project bidding and timing well,” according to the research note. “It will probably leave megaprojects providing revenue support into 2026 and 2027, and by then, housing will be in even more desperate need of investment, and the changes in office [projects] should be flushed through.” 

Housing, office, and retail projects typically do not come with the same level of stability as megaprojects, due to their periods of development. 

United Rentals acquires Yak 

Meanwhile, Sunbelt Rentals’ largest competitor, United Rentals, invested $1.1 billion in the acquisition of construction, maintenance, repair and operations matting manufacturer Yak, according to a United Rentals release. That follows United Rentals’ acquisition Ahern Rentals, which closed at $2 billion and represents the second-largest acquisition in United Rentals’ history, President and Chief Executive Matthew J. Flannery, said during the company’s Jan. 25 earnings call 

United Rentals’ acquisition of Yak adds another dimension to the company’s operations and opens new market opportunities, according to an S&P Global research note. 

“The acquisition will expand URI’s specialty rental business by enabling it to create a matting solutions business line,” according to the research note. “We believe the transaction will provide URI with opportunities for cross-selling to its existing and new customers, as well as for expanding Yak’s mat product line into other markets.” 

Outside of the two largest rental companies, All Choice Rentals acquired Select Equipment Rentals on March 10 and Boels Rentals announced the planned acquisition of aerial work platform provider Riwal today, according to releases from All Choice Rentals and Boels Rentals. 

Market impact 

Shares of Ashtead Group (OTCMKTS: ASHTY) were down 1.72% from market open to $64.29 as of market close today. Ashtead Group has a market capitalization of $28.21 billion.  

Shares of United Rentals (NYSE: URI) were down 1.75% or from market open to $664.30 as of market close today. United Rentals has a market capitalization of $45.43 billion.  

Ashtead Group’s performance and the state of the equipment rental industry position Ashtead Group’s stock well against United Rentals, according to the Melius Research note. 

“This may be the first time the shares are the most attractive in the rental subgroup, even with less revenue growth than its history,” the research note stated. “For the first time, we think Ashtead is starting to look at least as attractive as URI.” 

United Rentals held a 15% market share, while Sunbelt Rentals held an 11% market share, according to United Rentals’ Q4 2023 earnings, ended Dec. 31, 2023. 

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