24.08.2010

Wolseley sells Brandon

UK based international building supplies company Wolseley has announced the sale of its UK rental business Brandon Hire.

Private equity firm Rutland Partners has agreed to buy the business for a total cash consideration of £43 million, payable on completion which is expected within 30 days.

Brandon had revenues of around £70 million for the year to the end of July, with net assets of around £35 million.

Wolseley’s chief executive Ian Meakins, said: "We are disposing of the business in line with Wolseley's stated strategy of focusing on our growth businesses and those with synergies. Rutland Partners' investment in Brandon Hire demonstrates their confidence in the business and we wish them every success as they continue to develop the business for the benefit of its staff and customers."

Rutland Partners is a smaller private equity business that until now has invested in more consumer oriented businesses, however the company says that it is flexible enough not to be sector specific.

It likes to acquire businesses with price tags in the £10 to £50 million region that it believes have an underlying value of up to £200 million and considers itself something of a turnaround specialist, selling businesses once they are performing well and the market offers a good return.

Brandon was acquired by Wolseley in March 2006 for £71.9 million, it had revenues at the time of £57 million. Wolseley then merged the business with its Hire Center rental operation adding a further 115 locations and taking the combined number of outlets to 270.

The combined and consolidated business, which now operates from 177 branches, is what Rutland is buying.

Brandon is the fifth largest general equipment rental company in the UK in terms of revenues and made an operating profit of around £6.5 million in 2009.

Vertikal Comment

Brandon hire never seemed to sit well within Wolseley, which in recent years has been a highly acquisitive, highly indebted builder’s supply company on the international stage.

To an outsider the acquisition of Brandon in 2006 seemed more about making more of its existing Hire Center operation than any desire to ‘get into’ the rental business.

There was also a feeling that having rental operations within builders merchants was the future, although it does not appear to have quite worked out as well as many had hoped and a large number of the locations that have been closed are the in store ones.

Brandon is a good business and could do well under the stewardship of Rutland.