3i and management team buy HSS
The Davis group has announced that a management buy-in team led by HSS managing director Lister Fielding, and funded by 3i, has bought HSS tool hire for a disclosed sum of £145 million.
Fielding, who has made HSS one of the most innovative companies in the UK tool hire business and has been instrumental in taking the concept to overseas markets, will move to deputy chairman, while Alan Peterson, formerly cheif executive of Meyer International will take on the role of chairman. Paul Nolan, previously managing director of Service Team Holdings, a recruitment company within 3i's portfolio, will be appointed as chief executive.
HSS has been the subject of disposal speculation since the Davis group announced that it had received a trade offer for the business in March 2003. It is understood that a number of trade buyers have been involved over the past nine months in takeover talks.
The Davis group acquired HSS 10 years ago from Molem construction for £52 million. During this period, the company's revenues have grown to over £160 million, but profitability has been hit hard in the past 18 months by poor results in the US, following the acquisition in July 2001 of RentX, a regional/national rental company.
The HSS-RentX fleet in North America is heavily weighted towards aerial platforms, far more so than the normal HSS product profile. The new company should therefore be able to benefit early on from the improving US market. Alternatively, it should find that a disposal will be possible now at realistic prices, although the dollar/sterling exchange rate will take the edge off any improvements.
HSS is the largest renter of alloy access towers in the UK and Ireland, and has a significant fleet of powered access equipment.
Wholly owned operations are located in the UK, Ireland, the US and Germany, with franchise agreements in place in several other markets.
The £145 million sale price was made up as follows:
£112.5 million in cash; £32.5 million in vendor loans, made up of £12.5 million in loan notes and £20 million in a secured loan.
Funding for the purchase came form 3i venture funds and a bank syndicate headed by ABN Amro.
The purchase price is based on a minimum asset value of £140 million. If after a full audit the asset values is less, a pound-for-pound adjustment will be made to the agreed purchase price.
HSS claim operation of some 500 branches in UK, Ireland and the US. Completion of the deal after contacting the competition authorities in the US, Germany, UK and Ireland, it scheduled for sometime in January 2004.
This takeover is interesting in that 3i, owns Independent Access Supplies, one of the UKs largest powered access companies and also has an interest in several other plant hire and access businesses including the troubled Meek Group and London-based company Universal.
The past two years has been difficult to say the least for these businesses and the fact that 3i now feels confident to extend its exposure to the UK hire sector says a great deal about their projections for the UK hire market.