Vp’s £69m move for Brandon cre­ates hire gi­ant

Yorkshire Post - Business - - BUSINESS - ROS SNOW­DON CITY ED­I­TOR Email: ros.snow­don@ypn.co.uk Twit­ter: @RosSnow­donYPN

EQUIP­MENT HIRE firm Vp has bought Brandon Hire, one of the UK’s largest tool and equip­ment hire busi­nesses, in a £69m deal that will boost earn­ings in the first year of own­er­ship.

Har­ro­gate-based Vp said Brandon is a well es­tab­lished, prof­itable busi­ness that op­er­ates a full range of tool hire equip­ment with an op­er­a­tional model which is closely aligned to Vp’s own spe­cial­ist tool hire busi­ness, Hire Sta­tion.

An­a­lysts said the ac­qui­si­tion is a sig­nif­i­cant deal and a strong fit for Vp, which saw its shares rise 5 per cent on the news.

James Tet­ley at N+1 Singer said: “This is a sig­nif­i­cant deal at £69m en­ter­prise value, rep­re­sent­ing a step change for Vp’s highly suc­cess­ful Hire Sta­tion busi­ness.

“Brandon is a long es­tab­lished, prof­itable busi­ness, which looks to be a strong cul­tural and ge­o­graphic fit for Vp.

“We up­grade our 2019 pre-tax profit fore­cast by 14 per cent and ex­pect fur­ther ben­e­fits to ac­crue over the medium term. We con­sider this deal a gen­uine one-off, which should be wel­comed by the mar­ket, in­creas­ing our es­ti­mate of in­trin­sic value to 1050p.”

Vp is buy­ing Brandon for a cash con­sid­er­a­tion of £41.6m payable on com­ple­tion and as­sumed net debt of ap­prox­i­mately £27m. The ac­qui­si­tion has been funded from new bank­ing fa­cil­i­ties with the group’s lenders.

Es­tab­lished in 1971, Brandon Hire is a na­tional tool and equip­ment hire busi­ness with over 900 em­ploy­ees, which op­er­ates from a net­work of 143 lo­ca­tions across the UK. It has an ex­ten­sive cus­tomer base fo­cused pre­dom­i­nantly on small to medium-sized en­ter­prises (SMEs) op­er­at­ing in re­gional and lo­cal ge­o­graphic mar­kets.

Neil Stothard, chief ex­ec­u­tive of Vp, said: “Brandon is a very good busi­ness. It fits the tar­get ar­eas of growth that we’ve been look­ing for. They are very strong in the SME sec­tor.

“It’s an area where we’ve had great suc­cess in re­cent years. We had an or­ganic plan, but Brandon de­liv­ers these plans in one fell swoop.

“It’s a busi­ness we like and an ex­cel­lent ad­di­tion to the group.”

He de­scribed it as a good deal for both par­ties.

“We don’t over­pay. Tool Hire is the big­gest con­trib­u­tor to Vp and this is a sig­nif­i­cant add on. It builds on our strength,” he said.

Vp said Brandon is very strong in the South West, which com­ple­ments Vp. While Vp has con­cen­trated more on cities, Brandon is fo­cused around towns and its branches are a lot smaller than Vp’s Hire Sta­tion branches.

“There’s very lit­tle over­lap with out net­work and their’s,” said Mr Stothard.

Vp is look­ing for cost sav­ings in terms of pro­cure­ment and in­fra­struc­ture, but there are no plans for any job losses and Brandon will ini­tially be run as a sep­a­rate part of the busi­ness.

Vp said the com­bi­na­tion of the two busi­nesses will, over the medium term, de­liver economies of scale in pur­chas­ing and op­er­a­tions and will cre­ate a lead­ing spe­cial­ist tool hire busi­ness within the UK divi­sion of Vp.

Brandon made a rev­enue of £79.8m in 2016, gen­er­at­ing prof­its be­fore in­ter­est, tax, ex­cep­tion­als and amor­ti­sa­tion of £6m from gross as­sets of £50.6m.

Jeremy Pilk­ing­ton, chair­man of Vp said: “The ac­qui­si­tion of a well es­tab­lished busi­ness of the size and qual­ity of Brandon Hire is a sig­nif­i­cant de­vel­op­ment for Vp.

“The Vp and Brandon Hire busi­ness cul­tures are closely aligned and we look for­ward to work­ing with all of the Brandon Hire em­ploy­ees in de­vel­op­ing the busi­ness fur­ther over the years.”

Vp will an­nounce in­terim re­sults on Novem­ber 21.

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