Activist investor Toscafund has called for Speedy Hire (SDY) to fire its executive chairman Jan Astrand after he rejected its attempts to force a merger with rival HSS Hire (HSS).

Toscafund, which owns 19% of the shares of both companies, says business combinations in the tool hire industry are needed because of substandard industry profitability.

While Toscafund’s letter to Speedy Hire’s shareholders does not mention HSS, it seems clear the tie-up it is promoting involves its other portfolio company.

In December 2015, Speedy announced it would not make an offer for HSS following boardroom mutiny at the proposal. Non-executives Christopher Masters and James Morley threatened to sack Astrand for suggesting the deal, before resigning themselves.

After improving commercial performance at Speedy Hire in the first six months of 2016, Astrand told Toscafund on 21 June a deal was no longer the right strategy.

‘We are a committed shareholder of Speedy Hire, have been invested since 2013, and now own 19.5% of the equity,’ said Toscafund founder Martin Hughes. ‘As the company’s largest shareholder, we believe it is our responsibility to look after the interests of all investors.’

We believe Speedy can recover on its own and see a half-baked merger with an ailing rival as the wrong strategy.