ALD acquires LeasePlan for €4.9 billion – “NewALD” is born
So it’s finally happening: ALD announced it will acquire 100% of LeasePlan. Price of the merger: €4.9 billion. Société Générale will own ca. 53% of the merged company, provisionally called “NewALD”, LeasePlan shareholders a total of 30.75%. The merged entity forecasts 6% fleet growth per year.
The news is not exactly a surprise. As we reported in October last year, both companies revealed they were in talks about some sort of takeover of LeasePlan by ALD. That doesn’t lessen the major impact of the deal, now it’s finally been clinched. Considering the prominence of both companies, the merger will most likely lead to a major realignment of the fleet and mobility industry, in Europe and beyond.
What we know
So, what’s in the deal? Here’s what we know so far.
- ALD has signed a Memorandum of Understanding to acquire 100% of LeasePlan from the consortium that owns LeasePlan, which is led by TDR Capital.
- The acquisition, which is expected to close by the end of 2022, will cost €4.9 billion and will be achieved via a combination of cash and shares.
- LeasePlan shareholders will hold 30.75% of the merged company. ALD’s parent company Société Générale will have around 53% and commits to remaining the majority shareholder for the long term.
- The provisional name for the merged entity: “NewALD”.
- “NewALD” will have a combined fleet of about 3.5 million vehicles worldwide. By its sheer size, it will be a leading mobility player on the global scale, create massive synergies and economies of scale, and generate significant value for shareholders.
Growth, improvement, synergies
In a press release, the parties to the proposed deal – approved by the Boards of Société Générale, ALD and LeasePlan but pending approval by the relevant authorities – call the merger “transformative” for their companies:
- They predict “NewALD” will be positioned for long-term fleet growth of at least 6% per year, following the integration of ALD and LeasePlan.
- “NewALD” would also target an improvement in cost to income ratio to ca. 45% by 2025, confirming its best-in-class position in the industry.
- The transaction is expected to generate operational and procurement synergies of around €380 million per year, before tax.
- Considering the benefits of fully-phased synergies, and excluding restructuring costs, the pro-forma accretion of normalised earnings per share could be c. 20% in 2023.
“Today marks the beginning of a new chapter in our history,” said Tim Albertsen (CEO ALD, pictured left). “This proposed transaction is instrumental in creating a leading global player in mobility. By combining the multiple strengths of ALD and LeasePlan, gaining size, joining forces in digital, and creating a leading provider of sustainable mobility solutions, we would transform our industry and be best positioned to deliver even better solutions and value propositions to our enlarged client base, with a clear path to zero emissions mobility and not least deliver strong shareholder returns over the cycles."
Said Tex Gunning (CEO LeasePlan, pictured right): “The combined business would be instrumental in moving the automotive industry from ownership to subscription models and zero-emission mobility. By joining forces with ALD, we combine the best talents in the industry with the investment power needed to meet the next-generation mobility needs of our customers. From day one, NewALD would be operating one of the largest fleets of EVs and will continue to set the standard for Environmental, Social and Governance in the mobility industry.”
“This deal was strategically necessary”, said Mr Gunning in a follow-up conversation with Dutch trade journal Automotive Management, citing ongoing megatrends such as ownership-to-usership, carsharing and subscription. The merger offers the advantages of scale and access to funding that are necessary to develop the digital tools that offer the seamless experience customers want, according to Mr Gunning.
Last but not least, the merger also strengthens the lessors’ position vis-à-vis the OEMs, Gunning says: “The OEMs increasingly want to deal directly with their end customers, both corporate and private. That makes them our competitors – as they readily admit. However, especially corporate clients prefer to deal with multi-brand suppliers, which they see as a plus.”
Using figures from June 2021, LeasePlan and ALD (soon “NewALD”) jointly have 3.5 million vehicles in portfolio. That puts them behind only Volkswagen Financial Services (11.3 million) and RCI Bank & Services (3.8 million), and ahead of Toyota Financial Services (3.2 million), Arval (1.4 million), Element (1 million) and Alphabet (0.7 million).
In a digital press conference, Frédéric Oudéa and Diony Lebot, CEO and Deputy CEO of Société Générale, joined Tim Albertsen to offer a preliminary sketch of the deal, and what it will mean to all involved.
- The deal should be closed by the end of the year, and in the first phase thereafter, the aim is to tactically integrate the new company’s 12 major markets – i.e. by mid-2024 (the company/companies are not yet saying which those 12 markets will be). It is expected that the management teams will stay in place until integration is achieved; and that “NewALD” will be led by Tim Albertsen.
- One of the obvious questions pertains to the different electrification goals of both companies. By 2030, ALD wants to have 50% of its new deliveries to be electrified. LeasePlan is aiming for full electrification by then. The compromise, for now, seems to be that each entity maintains its own ambitions. From 2025, digital and operational processes should be in place to allow for integrated management.
- Remarkably, Mr Oudéa said it was Société Générale’s intention to turn its new, expanded fleet and mobility subsidiary into a full-blown third pillar, “next to retail banking and investment banking”, and this because of the great potential of the rapidly emerging new paradigm of mobility – sustainable, shared, connected.
Watch this space for more details as they emerge.
Image: ALD Automotive / LeasePlan