HSS Parent Agrees to Sell HSS to Investment Firm

Feb. 1, 2004
LONDON Venture capital and private equity firm 3i and funds associated with 3i and other financial investors has reached an agreement to acquire HSS,

LONDON — Venture capital and private equity firm 3i and funds associated with 3i and other financial investors has reached an agreement to acquire HSS, the tool rental division of Davis Service Group PLC for up to 145 million pounds, or about $264 million, the DSG announced recently. Completion of the sale is conditional on Irish, German and United States anti-trust clearances and is expected to be finalized this month.

HSS owns Denver-based HSS RentX in the U.S., No. 18 on the RER 100. It also has rental branches in the United Kingdom, Ireland, and Berlin, Germany.

In March 2003, Davis said it received unsolicited approaches from parties that indicated an interest in acquiring HSS, and that discussions have been held with “a number of potential purchasers” in recent months.

Davis acquired HSS from John Mowlem & Co. PLC in 1993 for 52 million pounds, about $95 million in current exchange value. HSS has grown significantly and now has more than 500 locations in the U.K. and Ireland. HSS acquired HSS RentX in July 2001 for 36 million pounds, about $65 million at the current exchange rate. HSS has franchising arrangements in seven other countries.

In the first half of the current financial year, HSS' revenue grew by 7 percent in the U.K., but dropped by 20 percent in the U.S., according to documents recently obtained by RER.

London-based 3i, which invests around the world in start-ups, buy-outs and buy-ins, focusing on businesses with high growth potential and strong management, has agreed to acquire HSS for about $204 million in cash, about $22.7 million in vendor loan notes, and $36.4 million in a secured vendor loan. The consideration is based on the net assets, including goodwill, of HSS at completion being not less than $255.8 million.

Lister Fielding, executive director of Davis and managing director of HSS, has resigned from the company's board effective immediately.