Yesterday Vp plc announced the acquisition of Higher Access Ltd, (the UK leader in hiring out niche tracked access platforms, operating from two sites in Burnley and Luton) for £4.1 million. The business will become a subsidiary of Vp's UK Forks division. Vp also confirmed that it had "experienced a satisfactory winter period", and that it is on track to deliver full year results (for the year ending 31 March) in line with current market expectations.
Vp has an excellent record in recent years of making very successfull (and earnings enhancing) bolt on acquisitions, which, in almost every case, they had been tracking for a long time prior to purchase. We anticipate that Higher Access will continue this trend.
EV/EBITA multiples across the wider equipment rental sector have declined by around 10% since Vp's interims were released on 25th November. We continue to believe that Vp deserves a premium rating, reflecting its predictable earnings, healthy ROCE and operational breath - albeit we have nonetheless conservatively reset our price target from 800p to 725p/share, reflecting the overall sector (and market) derating.
