Grafton Group agrees £27m takeover of HSS Hire’s Irish business
- HSS Hire rents and sells equipment such as floor scrubbers and diamond drills
Building materials supplier Grafton Group has agreed to buy HSS Hire’s Republic of Ireland business in a €31.6million (£27million) deal.
The FTSE 250 company will operate the division as part of Chadwicks, its Irish distribution business, once the takeover is completed.
Chadwicks runs the Sam Hire brand, which concentrates on smaller plant, tool, and equipment leasing from 23 sites across its branch network.
Grafton said the acquisition ‘presents a unique opportunity for Chadwicks to offer a comprehensive national hire service to its customers from small DIY jobs through to large civil works.’
It expects the transaction to ‘provide an attractive return on invested capital’ and be earnings-enhancing in the first full financial year following the deal.
The takeover still requires sign-off from the Competition and Consumer Protection Commission [CCPC] in Ireland.
Takeover: Building materials supplier Grafton Group has agreed to buy HSS Hire’s Republic of Ireland segment in a £27million deal
Eric Born, chief executive of Grafton, said HSS Hire Ireland was a ‘well-respected tool and equipment hire business and brand with a strong and experienced management team.’
He added that the deal was commensurate with its strategy to ‘strengthen our market positions’ and widen the offering of Chadwicks across the Republic of Ireland.
On an adjusted basis, HSS Hire Ireland achieved revenue of €31.9million and earnings before nasties of €3.9million in the fiscal year ending 28 December.
During the period, the group’s UK-based parent business rebranded its tool hire and equipment rental arm to The Hire Service Company.
This followed the formal separation of the management and trading functions of HSS’s ProService and Operations divisions as part of a restructuring programme.
Founded in 1957, Manchester-based HSS Hire rents and sells equipment such as floor scrubbers, diamond drills, cement mixers, and vacuum cleaners.
Steve Ashmore, its chief executive, said the takeover ‘realises an attractive valuation for our shareholders’ and would create a firm that is ‘well positioned to deliver enhanced returns when UK construction improves.’
HSS Hire Group shares rose 5.8 per cent to 6.6p by mid-Wednesday afternoon, while Grafton Group shares were 1.1 per cent down at 853.6p.
Grafton’s latest takeover deal comes just over five months after it bought Spanish air conditioning and heating products distributor Salvador Escoda.
Analysts at broker Stifel said Grafton still has ‘significant cash resources’ that could go towards acquisitions.
They also said the firm ‘has the considerable advantage of strong board-level and operational management and a robust balance sheet.’
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