Vp’s acquisition of Brandon Tool Hire is to be investigated by the Competition and Markets Authority (CMA).
Brandon Tool Hire was bought by rival Vp for £41.6m on 8 November.
Vp, which is publicly listed, received notice of the CMA’s investigation last Friday and informed the London Stock Exhange today (4 Dec).
The company said in a statement: “Prior to completion of the acquisition, Vp conducted a detailed due diligence exercise, including assessing potential competition considerations, and it will fully assist the CMA with its enquiry.
“The group will provide further updates to the market as and when appropriate.”
The CMA has ordered any merging of Brandon with Vp’s existing hire businesses to be stopped while the investigation is under way.
In the enforcement order sent to Vp on 1 December, the CMA said it was considering whether the deal “has resulted or may be expected to result in a substantial lessening of competition in any market or markets in the United Kingdom”.
Upon announcing the deal earlier this month, Vp chairman Jeremy Pilkington said: “The acquisition of a well-established business of the size and quality of Brandon Hire is a significant development for Vp.
“We have, over recent years, developed an industry-leading specialist tool hire business in the UK.
“This transaction represents a major step-change in the scale and scope of our specialist tool hire offering.”
The company also said at the time that it expected that the “combination of the two businesses will, over the medium term, deliver economies of scale in purchasing and operations and will create a leading specialist tool hire business within the UK division of Vp plc”.
Brandon Hire has 143 outlets across the UK, serving mainly SMEs.
Vp shares fell 5 per cent in early trading before recovering to stand 1 per cent down by midday.
The CMA has not yet set a date for a launch of the merger inquiry.