Ryder System Inc. (R), the world’s largest provider of integrated logistics and transportation solutions acquired Hill Hire Plc for £154 million (approximately $252 million).
Hill Hire PLC is a subsidiary of Lloyds Banking Group (LYG) and a leading British company for commercial truck leasing, rental and maintenance with a strong foothold in contractual businesses in U.K.
The acquisition marks a key development for the company’s business and is expected to be accretive to its financials. Following the acquisition, Hill Hire is expected to generate revenues of approximately £90 million (approximately $147 million) for Ryder’s Global Fleet Management Solutions on an annualized basis.
The deal will foster Ryder’s business expansion in heavy duty vehicle contract (full service lease) and rental markets in U.K. and improve service capacity by adding approximately 4,000 heavy duty vehicles and commercial rental vehicles, ancillary equipment including a large trailer fleet for contractual lease and rental, 300 employees including maintenance technicians, and 13 vehicle maintenance facilities across the country. Approximately 60% of Hill Hire’s fleet of heavy duty vehicle comprises trucks and set to complement Ryder’s existing fleet, primarily constituting light and medium duty trucks.
Acquisitions play a key role in Ryder’s businesses structure. The company has benefited greatly by most of its business takeovers till date. Ryder has expanded and tapped new business opportunities latent in the companies that it snapped up.
In early 2011, Ryder System’s acquired companies such as Carmenita Leasing Inc. and Scully Companies Inc., through which it gained access over a large fleet of vehicles and contractual customers.
With improving global market, we believe Ryder remains well positioned to benefit from organic growth as well as acquisitions. Further, Ryder’s healthy balance sheet provides investment possibilities in key takeovers and transport vehicles that will drive long-term growth.
Consequently, we recommend our long-term Outperform rating on Ryder System supported by a Zacks #2 (Buy) Rank.
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