Business Services Sector Comment – November 2016 – Plant hire

International acquirers look favourably upon the plant hire sector

Despite the uncertainty post Brexit and the negative impact on the construction industry and its supply chain, international trade acquirers remain keen to leverage strong balance sheets and take advantage of favourable exchange rates to build presence in the UK.

This month saw three further acquisitions by US trade consolidators. The first deal came in the form of Watkins Hire, a provider of industrial and commercial heating and cooling equipment rental services, which was acquired by Carrier Corporation. Carrier Corporation, a subsidiary of UTC, is on an aggressive growth strategy across Europe having previously completed acquisitions in the Netherlands, Switzerland and France. The second deal saw LDC exit its investment in Microlease, the electronic test equipment specialist, to Platinum Equity-backed Electro Rent Corp. Finally, Brundage-Bone Concrete Pumping Inc, a Denver-based provider of concrete-pumping services announced the acquisition of Camfaud Concrete Pumps. The deals illustrate the high levels of cross-border activity in the plant hire market and the current appetite of international acquirers to take advantage of the weakened pound to buy businesses at attractive valuations.

That said, the high levels of cross-border activity are not just limited to the US as leading European players also continue to utilise M&A to bolster often sub-scale international offerings. The recent announcement that Belgian-based TVH Group has submitted a revised offer for Lavendon, which is thought to value the company at €407m, is just one example. Another example is that of Kiloutou, which acquired powered access rental company Starlift in March to enter the German market.

However, whilst international acquirers are looking to bolster their international exposure, many UK-headquartered companies are firmly focussed on staying afloat. The recent news that Hewden will appoint administrator EY acts as a timely reminder of the challenges the sector currently faces and comes at a time when UK construction suffered its worst quarter in four years after the Brexit vote. Other incumbents to have posted poor results include Aggreko which has been impacted by oil prices and HSS which, despite recent improvement, still posted a loss.

It is not all doom and gloom though as star performer Ashtead, which has already agreed to buy part of Hewden, recently reported strong growth while results for troubled Speedy Hire suggest the company is starting to turn a corner. Further, market incumbents will be pleased to see that the UK construction PMI edged up to 52.6 in October from 52.3 in September – any figure above 50 indicates activity is growing.

Here at Clearwater International, we believe the longer term market dynamics are strong. Companies continue to recognise the benefits of utilising specialist plant hire companies which are able to provide access to a wider range of equipment, provide expert maintenance and offer market leading compliance. Additionally, with infrastructure projects like Heathrow and Hinkley Point recently getting the go ahead, companies operating in the supply chain are well placed to benefit.


Other notable deals

Sodexo SA, a listed French-based provider of integrated Quality of Life services and one of the world’s largest employers, acquired PSL Purchasing Ltd, a leading provider in fresh food procurement in the UK, for an undisclosed sum. Clearwater International advised PSL on the sale.

SYNLAB International GmbH, the largest provider of laboratory services in Europe and a portfolio company of international private equity firm Cinven, has acquired Lausitzer Analytik GmbH (LAG), a Germany-based laboratory testing specialist in fuel, oil and environmental testing, from palero capital, a private equity company. Clearwater International acted as the sole financial adviser to palero capital.

Arthur McKay & Co Ltd, a UK-based building services contractor with a turnover of €175m, has been acquired by facilities management giant Servest Ltd, for an undisclosed sum. The acquisition will help Servest expand and develop its technical expertise, in addition to extending the FM company’s geographical reach.

Empresaria plc, the UK-based international specialist staffing group, acquired a 65% stake in IT specialist recruiter ConSol Partners (Holdings) Ltd, for approximately €10.7m, with the remaining 35% to be held by the senior management team.

Alcuin Capital Partners, a UK-based private equity firm has acquired a minority stake in UK-based Air Charter Service plc (ACS), an aircraft charter brokerage business. ACS offers its services to the private jet, commercial airliner and cargo aircraft sectors, arranging more than 10,000 charters annually.

Cognizant Technology Solutions Corporation, the listed US-based IT services firm, has agreed to acquire Frontica Business Solutions AS, a Norway-based provider of ITO and BPO services to the oil & gas industry, from Norway-listed oil service investment company Akastor ASA, for approximately €114m. The deal excludes Frontica Advantage, the staffing business segment of the Frontica Group.

The House of HR, a Belgium-based provider of human resource management solutions, and a portfolio company of France-based investment firm NAXICAP Partners, has bought TimePartner Group GmbH, a Germany-based specialised recruitment firm, with a national network of 120 offices in Germany and run-rate revenues of €260m. No further details were disclosed.

DHL Supply Chain, the contract logistics specialist within Deutsche Post DHL Group, has acquired MIT Safetrans Srl, an Italy-based logistics provider for an undisclosed consideration. MIT, which reported revenues of €48m and an EBITDA of €6m in 2015, operates in all sectors where technology is present, including hi-tech, life sciences and healthcare. Through the transaction DHL Supply Chain Italy will be able to develop new competencies and extend its high added-value services portfolio.

AUCTUS, a Germany-based private equity firm, has acquired JR Holding GmbH, a Germany-based temporary employment business. With a turnover of €80m and 20 offices across Europe, JR Holding serves companies in sectors such as automotive, chemicals, pharmaceutical, retail, IT, and logistics.

Orlando Management, a Germany-based private equity firm, has agreed to acquire EuroMaint Gruppen AB, a Sweden-based provider of maintenance services for the rail transport industry, from Sweden-based private equity company Ratos AB. The transaction values EuroMaint at €67m.