SG Fleet was believed to be finalising a deal to buy LeasePlan on Wednesday night after it entered a trading halt earlier in the day ahead of the potential announcement of a transaction.
The pending transaction between the two companies was revealed by DataRoom in December.
DataRoom understands that both parties have been working towards a tie-up for the past two years.
Earlier, the understanding is that SG Fleet was to buy LeasePlan for debt and scrip in a transaction that would value the business at between $300m and $400m, although terms may have since changed on the back of booming car sales.
It is understood LeasePlan is working with Goldman Sachs and SG Fleet with Bank of America.
There was some earlier expectation that a deal could have emerged by the start of this year.
Car sales have recently been booming, and they are one of the biggest performance drivers of the vehicle fleet leasing and management companies like SG Fleet and LeasePlan.
SG Fleet is listed on the Australian Securities Exchange with a $568m market value, with the share price making a comeback since a crash in March on the back of the COVID-19 outbreak.
Its market value is now $676m, with shares at about $2.58.
LeasePlan had contemplated an initial public offering in 2017, when estimates suggested the business was worth about $350m.
The fleet manager was said to be on the market again around the middle of last year.
LeasePlan’s attraction for SG Fleet is that it has funding capability that it would want and would take considerable time to develop.
Consolidation is said to be needed among fleet management companies and, while there were moves by SG Fleet and McMillan Shakespeare to acquire industry rival Eclipx in 2019, a major decline in the target’s performance saw that go nowhere.
Should SG Fleet buy LeasePlan, the next logical move is for McMillan Shakespeare to buy Eclipx, say market analysts.
McMillan Shakespeare was always expected to return to the negotiating table with Eclipx once it sold its Right 2 Drive business.
A scrip merger is considered the most likely scenario.
LeasePlan is owned by the LP Group consoritum, which includes a group of pension funds such as Singapore’s GIC and the Abu Dhabi Investment Authority.
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