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Grafton Group, a prominent building materials provider, is expanding its operations through the acquisition of HSS Hire’s Republic of Ireland business. The deal, valued at €31.6 million (£27 million), will see HSS Hire Ireland integrated into Grafton’s Chadwicks division, strengthening its position in the equipment rental and tool hire market. This strategic move is expected to enhance Grafton’s service offerings and market presence across Ireland.
Grafton Group to Acquire HSS Hire Ireland
Building materials giant Grafton Group has reached an agreement to purchase HSS Hire’s Irish division in a transaction worth €31.6million (£27million).
The FTSE 250 listed firm plans to integrate the acquired entity into Chadwicks, its existing Irish distribution arm, upon completion of the takeover.
Chadwicks currently operates the Sam Hire brand, which specializes in the rental of smaller plant machinery, tools, and equipment from 23 locations within its branch network.
Strategic Expansion for Chadwicks
Grafton stated that this acquisition ‘presents a significant opportunity for Chadwicks to deliver a comprehensive nationwide hire service to its customer base, catering to projects ranging from small DIY tasks to extensive civil engineering projects.’
The company anticipates that the transaction will ‘generate an appealing return on invested capital’ and positively impact earnings in the first full fiscal year following the completion of the deal.
Regulatory Approval Pending
The takeover is still subject to customary closing conditions, including receiving the green light from the Competition and Consumer Protection Commission (CCPC) in Ireland.
Takeover: Grafton Group to buy HSS Hire’s Republic of Ireland business.
Leadership Perspectives on the Acquisition
Eric Born, chief executive of Grafton, described HSS Hire Ireland as a ‘well-regarded tool and equipment rental business and brand with a robust and seasoned management team.’
He further noted that the deal aligns with Grafton’s strategy to ‘bolster our market positions’ and broaden Chadwicks’ offerings throughout the Republic of Ireland.
HSS Hire Ireland’s Financial Performance
HSS Hire Ireland reported adjusted revenue of €31.9million and adjusted earnings of €3.9million for the fiscal year concluding on December 28.
During this period, the parent company of the group, based in the UK, rebranded its tool and equipment hire division as The Hire Service Company.
This rebrand followed the formal separation of the management and operational functions of HSS’s ProService and Operations divisions as part of an ongoing restructuring initiative.
HSS Hire Background
Established in 1957 and headquartered in Manchester, HSS Hire engages in the rental and sale of a variety of equipment, including floor cleaning machines, diamond drills, concrete mixers, and vacuum cleaners.
Steve Ashmore, chief executive of HSS Hire, commented that the takeover ‘secures an attractive valuation for our shareholders’ and will establish a business that is ‘well-positioned to produce enhanced returns when the UK construction sector recovers.’
Market Reaction
Shares in HSS Hire Group experienced a rise of 5.8 percent to 6.6p by mid-Wednesday trading, while Grafton Group shares saw a decrease of 1.1 percent to 853.6p.
Grafton’s latest acquisition follows its purchase of Spanish air conditioning and heating products distributor Salvador Escoda just over five months prior.
Analysts at brokerage firm Stifel indicated that Grafton maintains ‘substantial cash reserves’ that could be allocated towards future acquisitions.
They also highlighted that the company ‘benefits from considerable strength in board-level and operational management, alongside a resilient balance sheet.’