The $860m fleet leasing business McMillan Shakespeare is said to be back on the acquisition trail, fuelling suggestions that its once troubled rival Eclipx could once again be in play.
When releasing its results on February 19, McMillan Shakespeare said it would consider strategic acquisitions, and some think Eclipx is not off the agenda.
Spokesmen for the companies declined to comment.
McMillan Shakespeare posted a flat net profit of $33.9m for the six months to December, which is not a bad result considering that new car sales have fallen considerably, although its earnings before interest, tax, depreciation and amortisation were down.
With many players in the market, the thinking is that consolidation needs to occur.
Eclipx has also put the worst of its problems behind it and once it sells Right2Drive it is expected to be circled by a number of players.
In 2018, McMillan Shakespeare offered to buy Eclipx, which currently has a $482m market value, but the deal fell apart after Eclipx suffered two profit downgrades, causing its share price to tumble.
McMillan Shakespeare had at the time put forward an offer of 0.1414 McMillan Shakespeare shares and 46c cash for each Eclipx share held. The offer was worth about $912m around the time it was launched, but the value later dived as more bad news emerged.
Right2Drive and Grays Online were blamed for the bad performance. Grays Online was sold to Quadrant for $60m but Right2Drive is yet to be divested.
It is understood that three parties are in the mix for Right2Drive, which was earlier understood to have attracted interest from Kohlberg Kravis Roberts, Macquarie Group and insurers such as Insurance Australia Group, Allianz and Suncorp.
The price is believed to be around $40m and one party is understood to be in advanced discussions, with a sale likely to be announced by the end of the month.
Eclipx purchased Grays in 2017 for $179m.
Right2Drive was acquired by Eclipx in 2016 for $67m. The business provides rental replacement vehicles to “not at fault” drivers that have accident-damaged cars requiring repair.
Its book is worth about $75m, and some say it is a bargain for any acquirer that can pick up the operation for about $50m.
Insurers would see Right2Drive as complementary to their existing strategies.
Some believe that Sumitomo could also be closing in on Eclipx, with investment bank Citi close to the Japanese suitor.
Other potential buyers include Orix, SG Fleet and Element Fleet.
The entire sector has faced pressure from declining new car sales and weaker economic conditions.
McMillan Shakespeare is known to have a strong management team and buying Eclipx could prove a major coup for the company if it has the expertise to turn the business around.
Coal price not right as Kestrel mine owners seek $4.8bn pay dirt
The owners of the Kestrel coal mine will have to convince buyers to pay about $4.8bn for the mine, but the coal price has fallen about 20 per cent since it was first set to hit the market.
St John of God in discussions over Healthscope leases
The not-for-profit St John of God Health Care has discussed with Healthco Healthcare and Wellness REIT taking over some real estate leases from tenant Healthscope.