The $1.2bn deal Pacific Equity Partners struck to buy SG Fleet has been in the works since at least September, say sources, when the private equity firm approached with an offer for the fleet management and leasing company.
It offered the same price back then it is paying for the business now — $3.50 per share — but it was rebuffed by the board of SG Fleet’s major shareholder Super Group, as the premium was not large enough.
What’s changed is since that time, the SG Fleet share price has come off the boil, falling from around $3 to around $2.50 in October, which then made the company more open to accepting the PEP bid.
The price equates to 8.3 times annual earnings before interest, tax, depreciation and amortisation and 12.3 times net profit.
Next, expect to see further industry consolidation, with groups like Orix dusting off their file on companies like Fleet Partners.
Companies like SG Fleet were in favour last year as customers capitalised on government rebates for electric cars.
But, corporates are now moving away from electric vehicles with government incentives less favourable.
PEP is working with advisers Barrenjoey and Citi on SG Fleet, which is advised by Bank of America.
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