12 Jan 22

“It was a matter of finding the right moment”

Mike Masterson (pictured left) and Pascal Serres (pictured right) have a recent history as big hitters at ALD – the former as CEO, the latter as Deputy CEO – so they’ve followed the recent news about the acquisition of LeasePlan with more than a passing interest, and with great appreciation of the massive deal achieved by their former colleagues.

Back in Mike Masterson’s years as CEO of ALD (2011-20), the present deal with LeasePlan may already have been a twinkle in his eye. “It makes sense for all parties,” he says. “There’s a lot of value to be created from combining the strengths of ALD and LeasePlan.” Masterson has done plenty of value-creating himself, guiding ALD through a successful IPO – the very first of a major leasing company. 

“I’m proud of the whole team at ALD and what they have achieved,” says Masterson, now retired. “Not just senior management, but also operational management and country leaders. It’s really great to see that the company still does well and achieves success.”

Did your former colleagues in ALD’s senior management reach out to you for advice? 

“No, not really. I’m in regular contact with Tim (Albertsen, CEO) and John (Saffrett, Deputy CEO) and others, but on a private level. We play sports, we go out for dinner. We try not to talk business.” 

You and ALD were clearly already interested in acquiring LeasePlan as early as 2014. Was it the case that your parent company Société Générale was not ready at that time? If so, what changed? 

“Société Générale has always been very positive about ALD’s expansion and has always backed up our ambitions. For example, they have been a massive support for the IPO in 2017 and for the acceleration of ALD’s developments in mobility. That support has always been there. Also with respect for our long-standing interest in LeasePlan. But for a deal of that magnitude to succeed, all stars must align. It was a matter of finding the right moment, with the right mindset of all parties involved. And it appears that’s exactly what came together in the previous months.”

In your opinion, is the price of the deal right? Or is it too much or too little? 

“It seems to be the right price, at the right level. It values LeasePlan as a strong company, and the way the deal is built, it also values the shareholders of LeasePlan and ALD. That is necessary for the success of the deal and for value creation afterwards.” 

LeasePlan has a proud history of 60 years, first in the Netherlands, then beyond. Isn’t it a pity that the brand will disappear? 

“LeasePlan has always been a great company, a pioneer in our industry. And they still are. You don’t need to look at this deal as a loss. It’s a new era for both companies, in a new era for our industry. And within NewALD, both companies can continue towards a better future. That’s why I prefer to look forward rather than backward.” 

Looking back at your time as CEO at ALD, what are you most proud of?

“I have many great memories. For me, ALD is in the people business. Working with the Executive Committee, the Management teams, and the country leaders has always been a pleasure. And of course, we can be proud of ALD’s successful IPO in 2017 and of the company’s continuous geographic expansion, both of which have helped establish ALD as a global reference in our industry.”

Which elements of the old ALD would you like to see maintained in the ‘NewALD’?

“Three things. One: our entrepreneurial spirit. Two: our company’s international calling. And three: the drive to innovate, which is absolutely key for the success of a company in our industry. I’m very sure that ALD’s top management will keep these three elements alive and well in NewALD.”

When ALD announced last week that it would acquire LeasePlan, Pascal Serres was no longer surprised. However, when he first heard rumours about talks between both companies, the former Deputy CEO of ALD (2008-2017) and now Global Fleet and Fleet LatAm expert had two major reservations.

“Firstly, I thought it was too big a deal for ALD’s main shareholder Société Générale. And secondly, I was convinced that the price LeasePlan’s shareholders were aiming for – about $10 billion – was too high. That the deal did succeed, is testament to the fact that Société Générale really wanted it. And that it could be done at a reasonable price. To achieve that price level, LeasePlan first had to sell off CarNext so that TDR and legacy shareholders could likely reach their objective at the end.” 

So, roughly €5 billion, that’s a fair price for LeasePlan?

“Yes. Look at it in terms of valuation: before the announcement, ALD was valued at €5.2 billion, after the announcement at €5.8 billion. Keeping in mind that LeasePlan was less profitable than ALD in recent years, €4.9 billion is a fair price that allows a nice share deal.”

“Also keep in mind that you’re buying more than just vehicles. You also get knowledge, access to customers, and you’re positioning yourself to generate more value in mobility in the future. So all in all: a very nice deal.”

A deal that spells the end of LeasePlan, an iconic brand. Isn’t that a pity? 

“The name disappears, but not the company, not its legacy. And anyway, looking towards the future of the mobility space, a name like ‘LeasePlan’ is not that great anyway. It’s a good name for a car leasing company, but not for a digital mobility giant.”

So, is ALD a better name for the future?

“ALD has never been a good name as such. It’s become a strong brand because of the quality of the company, its people, and its services. That being said, the name by itself is not a strong one. Probably, it’s a good idea to change the name and choose a new one that better reflects the identity and values of a global mobility specialist.”

This is a huge deal. Do you think it will easily pass muster with relevant antitrust authorities? 

“Not easily, but pass it will. It’s all about how you categorise the business. Antitrust is about protecting the competitiveness of the market. If you can convince the authorities that you are operating in a market with much bigger players than yourself, there shouldn’t be a problem. So, rather than say they’re in the full service leasing business, ‘NewALD’ will say they’re operating in the vehicle or mobility financing market, where they’re smaller than Volkswagen or Renault captives, for instance.”

‘NewALD’ wil have about 3.5 million vehicles in portfolio. That means they need to buy and sell roughly 800,000 new vehicles per year. In other words: remarketing will become even more important.

“Remarketing is key for industry players. Leasing revenues are relatively stable whereas used car sales results are volatile and need optimisation. Leaseplan had entered in a deal with Carnext. So the interesting question is: What’s the relationship between CarNext and NewALD going forward going to be like? I’m pretty sure this has already been agreed as it is key for the future of Carnext which is willing to be the European market leader.

You were with ALD for 16 years. What do you think ‘NewALD’ should keep from the old ALD?

“ALD is an international people company, where diversity has always been an important value. You see that in the people that have management functions: they come from different countries, with different backgrounds, reflecting society at large. Secondly, ALD has a very good decentralised setup, with subsidiaries accountable for their own P&L’s. And finally, ALD is about smart innovation and partnerships. It doesn’t innovate just for the heck of it. There’s always a reason, a philosophy and a conviction behind it.”

Looking back at your time with ALD, what are you most proud of?

“Let’s start with the acquisition of Hertz Lease in 2003. It was a great experience, and in fact it was the basis for ALD’s subsequent growth. Did you know that most of the management of Hertz Lease ended up on ALD’s Executive Committee? Including Gianluca Soma and Mike Masterson, former CEO, and Tim Albertsen, the current one.”

“With that team, we developed the international business with Hewlett-Packard as our first international customer. And that eventually led to the successful expansion of ALD’s business, where I have fond memories of opening subsidiaries in Eastern Europe and Latin-America and signing partnerships with most manufacturers.” 

Final question. What’s your advice for Tim Albertsen to integrate LeasePlan and ALD?

“I dare not give advice to Tim, who is a friend… I just want to congratulate him and the whole ALD and Société Générale family. It’s a fantastic deal – but there will be hiccups and challenges over the next 36 months, as they work to close the deal and merge into newALD. At the same time, they must continue their path on innovation and stay competitive to achieve 6% growth: that is a nice challenge and I wish him all the best!"

Authored by: Steven Schoefs