Acknowledging a fleet management acquisition
It was a surprise announcement that had everybody talking back at the start of April.
Oh, you missed it?
Here’s the official headline then: Fleet supplier SG Fleet announced it intends to acquire the Australian and New Zealand businesses of Leaseplan.
Still don’t remember it? Alright, let’s take you through everything this news means.
The acquisition will create a $2.5 billion company which will result in 250,000 vehicles under SG Fleet management and leasing across New
Zealand and Australia, which is a pretty convincing reason to acknowledge SG Fleet as experts in fleet managing circles.
“This transformational transaction creates the ability to add scale across operations, funding and procurement activities. Greater scale will also allow us to step up our innovation efforts and create additional value for our customers,” SG Fleet CEO Robbie Blau says.
The acquisition of Leaseplan as well as an alliance agreement between the company’s owner Leaseplan Corporation and SG Fleet, will see a co-operative approach when it comes to referrals, product know-how and innovation in markets where neither party competes with each other.
“The agreement with Leaseplan Corporation will allow us to ensure a smooth transition for customers and also gives us the opportunity build a relationship with a major global player,” Mr Blau says.
Leaseplan offers fleet management and leasing services in Australia and New Zealand to well-diversified customer base.
“As well, Leaseplan Australia/ New Zealand is a very complementary business to SG Fleet, in terms of business activities, customer profile, product quality and service culture. This creates significant scope for synergies and the ability to add additional scale across operations, and funding and procurement activities.
“The resulting efficiencies will allow us to deliver a very compelling offering to existing and prospective customers,” Mr Blau noted.
The parties will work together closely to plan for the integration process.
In addition to the equity interest received as part of the consideration, Leaseplan Corporation will nominate a director to join SG Fleet’s Board.
As part of the transaction, Leaseplan Corporation will receive a combination of cash and shares in Asx-listed SG Fleet Group Ltd.
By joining forces with one of the region’s most competitive Car-as-a-service companies, Leaseplan’s Australian and
New Zealand operations will be best positioned to serve their growing customer base and compete for local market growth opportunities.
Tex Gunning, CEO of Leaseplan Corporation, said:
“With the announcement of our international alliance with SG Fleet, the combined business will be well positioned to serve its growing customer base and thrive in the Australian and New Zealand markets.
“In addition, Leaseplan Corporation will be able to place greater focus on leading the subscription megatrend and delivering accelerated profitable growth in its core markets.
“We are very proud of the businesses we have built up in Australia and New Zealand and we wish our colleagues every success as part of SG Fleet.”
Robbie Blau sums it up: “The acquisition would result in an increase in the proportion of full-service products such as operating leases in our product mix, as well as an improvement in the proportion of recurring revenue.
“This significantly raises the overall quality, as well as resilience, of our earnings, something we have been working towards for some time. Acquiring a business that funds on balance sheet also means we will bring our funding mix to the proportions we were targeting when we announced our securitisation project two years ago.
“It clearly creates a platform from which we can grow and create further shareholder value,” he said.
SG Fleet aims to complete the transaction in the third quarter of this year, subject to regulatory approvals.