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May 1, 2008

Hill Hire up for sale while Lex says no change

By Verdict Staff

Hill Hire up for sale while Lex says no change

Despite HBOS-owned Hill Hire being reportedly up for sale, its sister company Lex, the largest fleet leasing company in the UK, is adamant that it will remain in the hands of its existing owners.

Sources said that it would be unlikely that HBOS would sell a subsidiary that it paid some £226m to completely acquire only two years ago, and which has an 11 per cent share of the car finance market.

Lex, which also has around 50,000 commercial vehicles, is currently completing its assimilation,which started in 2007, of Bank of Scotland Vehicle Finance’s (BoSVF) 65,000-strong fleet.

Nonetheless, HBOS is currently folding its SME asset finance business into the bank’s general commercial team, a move that will result in job losses and a possible downscaling of its SME asset finance capability.

Last month The Sunday Times claimed that Hill Hire, one of the UK’s largest commercial vehicle and trailer lessors with around 21,000 vehicles in its fleet,is up for sale, and that accountants had been hired as sale advisers. Andy Mitchell, Hill Hire’s boss, refused to be drawn on the media reports. “I have nothing to say – it is only rumour and speculation,” he said.

It is barely two weeks since Hill Hire’s ultimate parent, HBOS, suffered an embarrassing undersubscribed rights issue and consequent speculation regarding a takeover by a foreign predator. In addition, Hill Hire’s immediate parent, Bank of Scotland Corporate, is expected to reveal increasing impairments later this month when the bank’s half-year results are announced. All of which are classic formulae for shedding “non-core” elements.

The news, however, should not have come as much of a shock to the industry given the state of the banking industry – and indeed the haulage sector – in the current economic climate.

Yet Bradford-based Hill Hire has traditionally been viewed by industry insiders as a well-run company. Mitchell, who has headed Hill Hire since 2001, brought to the job a broad expertise in finance and leasing, including time working at both Mercantile Credit and Barclays. During his seven years with Hill Hire the fleet has grown from 10,000 to 21,000 units.

During that time, he also grew the number of regional service depots to 17 – all staffed with trained and accredited employees. The company’s fleet includes a range of commercial vehicles from 3.5tn panel vans to 44tn top-weight trucks, including refrigerated trailers. It buys around 1,000 vehicles a year and operates with a mix of national customers and spot rental throughout its network.

Mitchell has long been a critic of competitors who cut margins to unfeasible levels to win business.

He has always stressed the need for commercial vehicle lessors to continually re-invest in service infrastructure as a way of differentiating themselves in the marketplace and avoid dependence upon merely quoting the lowest rate. For example, many of Hill Hire’s workshops run nightshifts to keep vehicles available and ready to rent.


1999: Hill Hire absorbed into Bank of Scotland at the same time as other subsidiaries, Capital Bank, Bank of Wales and British Linen Bank, are re-branded to that of the bank.

2001: Andy Mitchell joins Hill Hire as managing director.

2002: Major deal won to supply 500 new 13.6m tri-axle curtainsiders costing around £15m for MFI on a seven-year contract hire arrangement.

2005: Dave Barlow and John Rice join the board after being recruited from TransAmerica Leasing.

2006: Major deal won to supply £2m of liveried vehicles to Daniels Chilled Foods involving 24 vehicles ranging from 3.5-tn vans through to tractor units and trailers.

2007: Annual turnover reaches £130m.

2008: June. Three major deals won totalling around £1.5m.

Brendan Malkin

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