10th Jun 2024 10:41
(Alliance News) - A shift by Ashtead Group PLC to New York from London was seen as inevitable, analysts on Monday said.
On Saturday, the Telegraph reported that Ashtead is eyeing a move across the pond, in what would be a fresh blow to the London Stock Exchange.
Ashtead Group, a London-based provider of equipment hire, makes by far the most of its money in the US via its Sunbelt arm.
Shares in Ashtead fell 0.7% to 5,522.00 pence in London on Monday. The wider FTSE 100 was down 0.4%.
The Telegraph reported that the company is in the early stages of considering whether to switch its stock market listing from the UK to the US, which is where the vast bulk of its business is generated.
"The review will blindside officials in the Square Mile after Ashtead previously made a series of pledges to remain listed in Britain," the Telegraph said.
"It is understood the company has instructed City advisers to undertake a full examination of the merits of such a shift."
It would be the latest departure from the Square Mile.
Flutter Entertainment PLC, which has a large US business via the FanDuel, TVG and PokerStars brands, moved its primary listing to New York in May.
In September, building material firm CRH PLC shifted its primary listing to New York, giving up its FTSE 100 status in the process.
Panmure Gordon said: "Given that only 5.2% of group [earnings before interest, tax, depreciation and amortisation] is derived from the UK, with remaining derived in North America, the group is essentially a US business."
"More importantly, average daily volumes relative to United Rentals show that the London quote is constraining liquidity and the valuation."
Therefore, Panmore Gordon thinks a move to the US is a matter of "when" and not "if."
United Rentals Inc is a Stamford, Connecticut-based equipment rental company.
AJ Bell's Investment Director Russ Mould thinks Ashtead's proposed move was less to do valuation.
He pointed out Ashtead already trades on a higher valuation than its closest US-listed peer, United Rentals. Ashtead trades on 17.4 times next 12 months' earnings versus United Rentals’ 14.6 times, "so the valuation argument is thrown out of the window."
Mould said the motivation "appears to lie in staff remuneration, not equity valuation."
"There is a suggestion that Ashtead’s US-listed peers have their pockets lined with gold whereas the UK business only pays out silver or bronze."
"Theoretically, Ashtead could propose a big bump in the remuneration package for its directors without having to switch listing – it would simply need shareholder approval."
"Yet pay deals attract considerable public scrutiny and Ashtead might want to avoid being seen as the house of fat cats on a relative basis to UK-quoted peers."
"Sitting on the US stock market side-by-side to other companies doling out the riches to senior staff might not attract as much negative attention," Mould remarked.
By Jeremy Cutler, Alliance News reporter
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