Hewden Stuart is paying pounds 10.8m for Hireplant, which employs 400 people and operates 24,000 items of plant. That represents a pounds 3m discount to Hireplant's written-down net assets, which include 29 freehold and 10 leasehold properties.
Sir Matthew Goodwin, chairman, said: 'Hireplant represents a unique opportunity to buy a chain of depots with planning consents, a skilled staff and large customer base.'
Hireplant's sites are spread across the country, mainly in the Midlands and South. Five are in Scotland. The business is expected to make a loss this year of around pounds 500,000 from sales of pounds 16m. In the year to March it made a larger, undisclosed loss.
Hewden Stuart is partially financing the acquisition through an institutional placing of 6 million shares at 119p. The shares closed yesterday up 2.5p at 121p.
Sir Matthew said that the encouraging start to the current year that he had noted at last month's annual meeting had continued. Profits for the first six months ending today will exceed last year's.
In the year to January, pre-tax profits slipped by a fifth from pounds 15.1m to pounds 12m, although nearly two-thirds of the downturn was caused by a loss in Hewden's tower crane division.
Although profits have fallen two-thirds from the 1990 peak of pounds 36.1m, Hewden is unusual in the plant hire industry for having come through the recession without recording a loss. Despite pounds 23m of capital expenditure last year the company generated cash and ended the year with pounds 13m in the bank.Reuse content