The 3 Biggest M&A Stock Opportunities for 2025

Key Points

• Mergers and acquisition activity can jumpstart revenue growth, expand operations and reach, and offer tax benefits, all of which may positively impact investors.
• Three acquisitions to watch in 2025 include purchases by United Rentals and Constellation Energy and the bidding war taking place over Australia's Insignia Financial.
• Investors should monitor potential M&A activity carefully and beware of the risks of following an overhyped deal.

Investors often overlook the importance of mergers and acquisitions (M&A) in their investments. M&A can help to turbocharge revenue growth faster than organic revenue, which may increase in many cases. It can help diversify and expand a business's operations, increase its market share, better facilitate vertical integration, and even offer tax benefits.

Targeting companies for investment with either a history of M&A activity or planned activity in the future can be difficult because it's not always possible to know how that company will fare before, during, and after it merges with or acquires another. Still, investors who are optimistic about the medium- or long-term prospects of a firm that plans to absorb another should certainly factor this into their evaluations of potential investment targets.

While there are many companies likely to be involved in M&A in 2025, three in particular stand out as being noteworthy for investors at the start of the year: United Rentals Inc. NYSE: URI, Insignia Financial Ltd. ASX: IFL, and Constellation Energy Corp. NASDAQ: CEG.

United Rentals Moves to Acquire H&E

Construction and industrial equipment rental company United Rentals has a long history of M&A activity, including at least five major acquisitions in the last five years. These and prior acquisitions have facilitated the firm's operational and geographical expansion and have allowed it to provide new product offerings and services.

United's most recent plan in this area is the acquisition of H&E Equipment Services, Inc. NASDAQ: HEES, a general rental company offering aerial work platforms, earthmoving equipment, material handling equipment, and similar products. The deal was announced in January 2025 and reflects a total enterprise value of $4.8 billion, inclusive of $1.4 billion of net debt.

When it closes—likely sometime in the first quarter of 2025—the acquisition of H&E will be one of United's largest. It will immediately expand United's rental fleet by about 64,000 units (with an original cost of $2.9 billion) and is expected to generate $130 million of annualized cost synergies within two years of closing.

Notable for investors is the "go-shop" clause of the transaction agreement, which provides H&E until February 17, 2025, to solicit and potentially enter into alternate proposals. Provided that the company does not seek an alternate buyer, the agreement with United is likely to go forward after that date.

Insignia Financial: Target of Potential Acquisition By U.S. Firms

Australian financial services firm Insignia Financial has spiked by more than 108% in the year leading to January 24, 2025, amid a bidding war between U.S. firms Bain Capital and CC Capital Partners. The two prospective buyers have issued a series of competing offers for Insignia, with the most recent bid as of that date reaching $1.92 billion in U.S. dollars.

Insignia's appeal for Bain and CC Capital includes its access to one of the largest private pension markets in the world, Australia's superannuation system, which is valued at close to $2.6 trillion USD.

Investors flocked to Insignia in recent months as the competition has heated up; while the stock price has recently been trading very closely to the cash offer price, depending upon how any future bids take shape, there may still be potential for the price to increase further.

Constellation Energy Expanding With Calpine Acquisition

Constellation Energy is one of the major energy providers in the United States, with a market capitalization of more than $108 billion as of January 24, 2025—and it's about to get much bigger. The company announced in January that it will acquire Calpine Corp., the largest generator of electricity from natural gas and geothermal sources in the United States. The net purchase price is $26.6 billion, and the deal is expected to close in the next year.

Following the acquisition, Constellation is likely to become the largest clean energy provider in the country, with an expanded reach nationwide and enhancing Constellation's existing nuclear, hydro, wind, and solar energy sources.

For investors, the benefits could be significant as well: Constellation expects the acquisition will add 20% to adjusted operating EPS by 2026 as well as $2 per share or more of EPS accretion in years beyond that. It should also generate at least an additional $2 billion of free cash flow per year.