Speedy Hire, Britain's largest tool hire company, is spending £115 million to buy Hewden Tools, to add another 188 depots to its empire in a fast consolidating sector.

The acquisition of the country's third largest tool hire company will consolidate Speedy's No 1 position with 540 depots raking in revenues of more than £400 million and giving the enlarged group a near 10 per cent market share.

Speedy Hire's all cash offer for the tool hire division of Hewden Stuart comes just a day after Archie Norman, the former chief executive of Asda, teamed up via his Aurigo Investments with Och-Ziff Capital Management for the £310 million purchase of HSS, another tool hire firm, from 3i.

Steve Corcoran, the chief executive of Speedy Hire, said: "The market is segmented. We are more business to business sellers. HSS is in a slightly different market, based more about serving maintenance and repairs with small builders. Hewden is the best fit for us in the market."

Last year Speedy Hire spent a total of £73.5 million buying first LCH, the power generator hire company, and then the smaller Lifting Gear Hire.

In March last year Wolseley, the world's largest plumbing supplies company, bought Speedy's smaller rival Brandon Hire for £72 million.

"Everyone knows we had a look at Brandon," Mr Corcoran added. "We walked away. We thought it was not a good fit for us. It is a sensible deal for them."

Speedy Hire has raised a new £325 million debt facility with its bankers Royal Bank of Scotland and Barclays for the Hewden Tools purchase and is raising £54.5 million via a share placement brokered by Oriel Securities, equivalent to 9.5 per cent of its issued share capital.

Mr Corcoran was bullish about prospects for the construction industry. He said: "Most of our customers are strong and robust and they have presented full orders. It is strong for the medium term. In the long term there is the building schools for the future government programme for upgrading schools, asset management underway in the water industry and potential income streams from the Olympics and the decommissioning of nuclear plants."

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