HSS Hire sells its Irish business

Image: HSS Hire Group

HSS Hire Group has struck a deal to sell its Irish business to Grafton Group for €31.6 million as the company seeks to focus on the intensely competitive UK market.

Under the terms of the deal, which has been conducted on a cash and debt-free basis, HSS Hire Ireland will be integrated into Chadwicks, Grafton’s distribution business in Ireland.

Operating from four branches and four customer distribution centres across the Republic of Ireland, HSS Hire Ireland is a specialist in tool and equipment hire, offering a wide range of products with a particular emphasis on powered access equipment.

What it means for HSS Hire Group

The sale of HSS Hire Ireland is the latest in a series of moves by HSS Hire that will see it reduce its reliance on costly depots but at the same time broadening its reach to customers.

In 2022, the company restructued, splitting into two distinct divisions: HSS ProService, focussing on supplying large contractors, and HSS The Hire Service Company (THSC) which aims at attracting smaller customers and the DIY market.

As part of this two-pronged strategy, the company has been working to embed rental services within merchant branches across the UK.

Currently the company has sales counters across 65 merchants in the UK.  These include a partnership with Selco Builders Warehouse announced in December 2023 which led to the opening of four satellite HSS operations within Selco branches in Slough, Milton Keynes, Tottenham, and Ashton-under-Lyne.

To facilitate the transition during its restructuring and division separation, HSS Hire Group established a trading agreement allowing its THSC division to continue servicing the ProService division, ensuring uninterrupted customer service throughout the process.

Additionally, a temporary services agreement was implemented to maintain continuity in back-office functions during this time.

IRN was told that ProService, which is THSC largest customer, is also operating a rehire model for some equipment that it offers.

The reorganisation has also included cost rationalisation measures, such as closing 10 depots in late 2024, to optimise asset utilisation and improve operational efficiency.

The sale of HSS Ireland could enable the company to focus its efforts on establishing more merchant partnerships in the UK.

Steve Ashmore, executive chair of HSS ProService and director of HSS Hire Group, said the strategy has proved successful so far.

“This transaction realises an attractive valuation for our shareholders and is a reflection of our continued strategic progress towards creating a more focused business with two distinct divisions well positioned to deliver enhanced returns when UK construction improves,” he said.

Focus on digital hire

While overall the changes signal continued consolidation in the market, they also underscore the growing importance of digitalisation in the evolution of equipment rental.

Outside of its depot strategy, HSS Hire Group has also been focusing on its ProService division, which is positioned as a digital marketplace for equipment rental.

The division leverages digital tools to streamline the rental process for both suppliers and customers, aiming to modernise the rental experience and improve logistics efficiency.

By focusing on technology-driven solutions, HSS ProService said it aims to create a marketplace that aligns with the broader trend of digitalisation in the equipment rental sector, offering more convenient transactions for customers.

Speaking financially, ProService could be an important driver of growth for the company. In its financials for 2024 it reported a 2% decline in like-for-like revenues, with total revenues standing at £333 million (excluding its Power business, sold to CES Global for £23.25 million in March 2024).

Its gross margin also slipped from 47.0% to 45.2%, impacted by a growing share of rehire business and lower seasonal product sales.

Underlying EBITA fell to £10 million, partly due to rising operating costs, although the company said it expected these figures in light of the restructuring.

By selling HSS Hire Ireland, HSS Hire Group could reduce financial strain and concentrate on scaling its ProService division.

Grafton’s gains

For Grafton Group, the deal strengthens its foothold in the Irish rental market, which has been fragmented, with several players vying for market share.

In 2024, HSS Hire Ireland generated an adjusted unaudited revenue of €31.9 million, with EBITA standing at €3.9 million.

The purchase price represents a multiple of approximately 6.9x EBITA, reflecting Grafton’s confidence in the business’s profitability and growth potential.

Grafton stated that it expects the transaction to enhance earnings in its first full financial year post-acquisition, delivering strong returns on invested capital.

Chadwicks, which already operates the Sam Hire brand focusing on small plant and tool hire across 23 locations, will significantly enhance its national hire service capabilities by integrating HSS Hire Ireland’s four branches and four customer distribution centres.

With HSS Hire Ireland’s emphasis on powered access equipment, Chadwicks will now offer a broader portfolio of rental solutions, catering to a diverse customer base from DIY users to large-scale civil contractors.

Eric Born, chief executive officer of Grafton Group plc, commented, “We are pleased to have agreed to acquire HSS Hire Ireland, which is a well-respected tool and equipment hire business and brand with a strong and experienced management team.

“This transaction is in line with Grafton’s strategy to strengthen our market positions in existing and adjacent markets and will broaden the offering of our Chadwicks business in the Republic of Ireland, where we continue to see compelling opportunities for further growth.”

Market impact

The UK equipment rental market is highly competitive, and this deal comes at a time when the sector is undergoing significant changes, driven by the growing adoption of digital solutions to improve service delivery and operational efficiency.

HSS Hire Group’s shift to a digital-first model and decision to consolidate depots reflects broader industry trends toward technology-driven rental solutions. As more companies embrace online platforms and marketplace models, competition in the UK rental sector is likely to intensify.

The sale, which is subject to approval by Ireland’s Competition and Consumer Protection Commission (CCPC), enables HSS Hire Group to lean into those efforts as well as sharpening its focus on the UK market overall.