Britain’s largest crane rental company, Initial GWS, is unofficially up for sale. Parent company Rentokil Initial has said that though it has not formally put up a “for sale” sign, it is ready to listen to offers for all its non-core businesses, including Initial Plant Services, the division which includes GWS.
The question is: Does anyone want it? Rentokil Initial has famously achieved 20% annual growth in 15 of the past 16 years, but this year is likely to grow by little more than 10%. The share price has more than halved since the start of the year.
Initial Plant Services includes aerial access equipment, scaffolding and portable buildings businesses as well as GWS and Sparrows Offshore. These have always been non-core for Rentokil Initial which acquired them in its 1996 takeover of BET. BET was acquired not for its plant business but for its facilities management services. Core for Rentokil Initial is pest control, hygiene, security and buildings management.
It is unlikely that any UK rival would want to buy GWS. Baldwins and Hewden Stuart would probably have to spend more on rationalising the business, closing duplicated depots, than on purchasing GWS in the first place. Anyone else would struggle to afford it. And though GWS has spent a lot of money on buying cranes in recent years – £20m ($32m) in the past 12 months – its fleet remains significantly older than its competitors. Its crawler fleet is all mechanical, for example, though it has two hydraulic 80 tonners on order from NCK (see story below).
Several European operators, such as Van Seumeren and Sarens, may have the wherewithal to take on GWS, but are likely to take one look at the margins achieved by mainstream crane rental in the UK and flee with wallets firmly shut. Besides, Van Seumeren’s interests, like those of Baldwins, are increasingly focused on specialist and heavy lifting. GWS sold its small heavylift division to Sarens in 1997.
An approach is more likely to come either from US venture capitalists – GE has already entered the UK plant market – or from the company’s own management. Or both in concert.
In spite of bearing the stigma of being unwanted children, both GWS and Initial Plant Services remain profitable businesses with excellent reputations. The Americans, however, are more likely to be interested in the aerial access platforms of Initial PTP than in the more complicated business of operated plant.
That just leaves the management buyout option. Last month Initial Plant Services managing director David Barrass said: “We can’t do an MBO without permission from Sir Clive [Thompson, the chief executive]. I’ve not asked for it and he has not given it.” That was last month. If no sensible offers come forward from elsewhere by the end of next month, that position may very well change.
