ALD Automotive’s deal to purchase LeasePlan has been approved, creating a new, global leader in the national and international leasing markets. Chris Farnell reports.
It is nearly a year since ALD announced its intention to acquire 100% of LeasePlan’s shares for €4.9bn. It was a deal that would create the leading player in the sustainable mobility sector, worldwide.
“We believe that LeasePlan is the perfect fit for ALD Automotive to shape the industry’s transformation as it is one of the largest fleet management and mobility companies in the world with a global and extensive offering,” says Tim Albertsen, ALD’s CEO. “This combination also represents a unique opportunity to create the leading global sustainable mobility player with a total fleet of 3.3m vehicles. “
The case for both ALD and LeasePlan entering the deal is a clear one. The business expansion will be taking place in a fast-growing market supported by strong underlying megatrends including changes among the user base, the need for more flexibility and shared mobility, digitalization and electrification. Through this deal, ALD is hoping to benefit from highly complementary capabilities and synergies by leveraging it and LeasePlan’s combined size and its digital and sustainability capabilities.
Albertsen describes the deal as “a step change towards creating a leading global player in the mobility sector with key competitive advantages across all client segments, products, services and geographic coverage.”
With their combined digital capabilities, ALD and LeasePlan aim to lead the digital transformation of the industry, creating a fully digital business model with enhanced investment firepower. It will also be a global provider of sustainable mobility solutions, working to be the partner of choice for electric vehicles.
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ALD has announced the launch of a share capital increase with shareholders’ preferential subscription rights for approximately €1.2bn. This will allow ALD to finance a portion of the acquisition price, alongside €1.8bn in cash, the issuance of €0.6bn subordinated debt fully subscribed by Societe Générale and newly issued ALD shares representing 30.75% of the combined entity’s share capital once the deal is completed, as well as warrants that grant LeasePlan’s shareholders the right to subscribe for up to 3.12% of the combined entity’s share capital.
Of course, creating a company of this scale, with its potential impact on the industry sector as a whole, is an act that will draw a lot of attention. As part of the process to complete ALD Automotive’s acquisition of LeasePlan, ALD needed to officially submit its antitrust file with the Competition and Markets Authority, as well as with the European Commission and all other regulatory authorities around the world required to review the transaction.
ALD obtained all expected merger control clearances conditioning the completion of the acquisition of LeasePlan, including with the CMA. The last clearance was obtained from the European Commission on November 25, 2022.
“All main regulatory and expected anti-trust conditions were completed as of 28 November 2022, including the ECB approval,” Albertsen tells us. “In addition, to prepare for the integration of ALD Automotive and LeasePlan worldwide, an Integration Management Office (IMO) was set up in April, leveraging the best talents of the two entities, to elaborate a joint migration plan to achieve a successful integration. Management aims to complete the integration of the two companies efficiently and within a short time frame from closing. On 29 November, we launched a c.€1.2bn capital increase with shareholders’ preferential subscription rights in connection with the contemplated acquisition of LeasePlan to finance a portion of the Acquisition price.”
While the deal has been allowed to go ahead, it does so with specific local conditions in the Czech Republic, Finland, Ireland, Luxembourg, Norway, and Portugal. It was decided that in these territories ALD Automotive and Leaseplan’s combined market share would create a company with too strong a market position.
To allow the deal to go ahead, ALD Automotive agreed to sell its operation leasing businesses across Ireland, Norway and Portugal, as well as selling LeasePlan’s businesses in the Czech Republic, Finland and Luxembourg.
More than that, ALD is required to allow whoever purchases those leasing businesses to run them in competition with ALD Automotive and LeasePlan. The combined company will also be obliged to provide the companies’ new buyers with a transition period of up to three years when those buyers will have access to IT services and used car platforms.
The European Commission said in a statement on the merger, “These commitments remove the overlaps existing between ALD and LeasePlan’s activities in the national markets for operational leasing where the Commission had identified competition concerns. Following the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.”
A Transformative Deal
The diligence of the authorities is understandable, given that this is a deal that will have lasting consequences, not just for ALD Automotive and LeasePlan themselves, but for the industry as a whole.
“By combining the multiple strengths of ALD Automotive and LeasePlan, gaining size, joining forces in digital and creating a leading provider of sustainable mobility solutions, we would contribute to the transformation of our industry and ensure that even better solutions and value propositions are delivered to clients,” Albertsen says.
This transaction is a transformational deal that will enable the creation of a leading global player in the mobility sector. With the deal complete, ALD Automotive and LeasePlan will form the largest fleet leasing company in the UK. The question is, where will the company go from there?
“As a leading player in the industry, we would continue to build on each party’s strengths and the combined entity would provide clients with key advantages resulting from the merger: a global offering, increased breadth in terms of products and services, a balanced geographic coverage, as well as a stronger purchasing power resulting into cost savings for our clients,” says Albertsen.
“We would also be ideally positioned to lead the digital transformation of the industry with enhanced firepower to invest and develop new mobility products and become a global leader of the transition towards electrification,” he added.