UK equipment rental company Speedy Hire Plc (LON:SDY) has bought cherry picker hire firms Prolift Access Limited and Platform Sales & Hire Limited (PSHL) for total cash consideration of £13mln.
The company paid £5.9m in cash for South West England-based Prolift with net debt assumed of £5.5mln. Prolift, which has a fleet of about 770 access platforms and 72 employees, sold £1.2mln worth of property to a company connected with one of the vendors before agreeing to be sold to Speedy.
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For PSHL, Speedy paid a cash consideration of £7.1mln with net debt assumed of £3.6mln. PSHL, based in the Midlands with operations in Milton Keynes and Birmingham, has a fleet of about 850 access platforms and employs 64 people.
Speedy said it expects to realise revenue and cost synergies from the acquisitions.
For the year ended 28 February 2017 revenue at PSHL came to £9.3mln, underlying earnings (EBITDA) stood at £2.4mln and gross assets totalled £9.8mln.
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Prolift reported revenue for the year to 31 December 2016 of £7.9mln with underlying earnings (EBITDA) of £2.4mln and gross assets of £12.1mln.
"These acquisitions strengthen our powered access offering and allow us to better serve our customers through the core fleet,” said chief executive Russell Down.
“I warmly welcome both Prolift Access and Platform Sales & Hire employees to Speedy."
Shares climbed 0.45% to 56p in morning trading.
House broker Liberum said the new assets should “fit nicely” into the group’s existing portfolio from a strategic perspective.
“It should also enable Speedy to bring in house some of its existing rehire revenues at higher margins, as well as providing the business with a platform to grow its powered access offering going forward,” said Liberum analyst Rahim Karim.
“From a financial perspective the deal also looks attractive with both businesses being bought at close to book value and an implied EV/EBITDA multiple of 4.4x.”
“Beyond this headline valuation we would expect that company to be able to drive both revenue and cost synergies over time, highlighting the accretive nature of the deals. “