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It’s a real buzz when the result confirms your accurate assessment of a situation. Last issue’s Forum confirmed the news that merchant giant Wolseley was preparing to sell Brandon, the No.3 player in the Tool Hire Top Ten. We discussed who the potential purchasers might be and concluded that a sale to private equity investors would be far more likely than a ‘trade sale’ to another Tool Hire Top Ten player.

On 24 August, Wolseley announced that it is selling Brandon to private investment company, Rutland Partners LLP, for £43m in cash. Wolseley’s brief statement says that it is disposing of Brandon, which employs around 960 people and operates 177 branches nationally, ‘as tool and equipment hire is no longer a core business activity.’ Having paid £71.9m for Brandon in March 2006, adding it to its existing Hire Center operation, which itself achieved a £30m turnover in 2005, Wolseley has obviously realised little more than 40% of its original investment. We will certainly not see Wolseley again in our industry.

In its latest financial year to 31 July this year, Brandon generated revenue of approximately £70m and has traded profitably, especially, we understand, in recent months. Net assets being disposed of amount to approximately £35m. As we discussed last month, 75% of Brandon’s outlets are standalone outlets. The minority are the smaller revenue and profit earning


operations trading as ‘implants’ within Wolseley merchant stores, mainly Build Center. Under the terms of the sale, these activities will continue to trade at these shared locations under Brandon’s new ownership.

As we accurately assessed last month, Brandon MD Tim Smith and his senior management team have been retained by Rutland and, indeed, are demonstrating their commitment to the future, by investing in the new business. Nick Morrill, Managing Partner of Rutland, comments, “Brandon has had a difficult couple of years as it was forced to adapt to market conditions but Tim Smith and his team have done a great job in managing that process. Rutland looks forward to helping Brandon continue its recovery in what remains a highly challenging economic environment.”

For his part, Tim Smith states, “the Brandon management team are delighted to be working with Rutland who we see as an ideal investor for this type of situation. Together we are committed to taking the business to a leading position in the market and continuing to improve performance.” Whilst we have paid so much attention to this deal, the irony is that, for the vast majority of Brandon staff, customers, suppliers and competitors, it makes not a lot of difference, as business has continued as usual.

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