Merger and acquisition deals are expected to return to the market in a big way in the coming months, and one that some believe will soon emerge is a tie-up between SG Fleet and the privately held LeasePlan.
It is understood LeasePlan is working with Goldman Sachs and SG Fleet with Bank of America and a deal between both could emerge before the end of the year, according to sources.
Car sales have recently been booming, and they are one of the biggest performance drivers of the vehicle fleet leasing and management companies.
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. Shares closed at $2.17 on Tuesday after touching lows of close to $1 in March.
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 this 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 last year, 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. However, Eclipx shares closed on Tuesday at $1.92. McMillan Shakespeare’s earlier offer was at $2.12, so for a bid to be accepted by the company’s board, it would need to be significantly higher.
Another company that could also take part in industry consolidation is Custom Fleet, but some say Canadian owner Element Fleet Management would be unlikely to part with the local operation.
Meanwhile, DataRoom understands that Hertz Global has opted to retain its Australian car hire operation, Hertz Australia, which had proved attractive to private equity.
Pacific Equity Partners, Allegro Funds Management, Anchorage Capital Partners, CPE Capital and Adamantem Capital were all understood to be knocking on the door of Hertz to find out if it was a seller.
The Wall Street Journal reported this week that Hertz has instead sold its US-based Donlen fleet management business to Apollo Global Management for at least $US875m ($1.19bn).
The global car rental firm entered Chapter 11 Bankruptcy in May during the grip of COVID-19 with loans worth $US19bn.
China energy bid switched off
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Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.