– By Victoria Nelson –
The fleet industry just got smaller. Two of the big publicly listed fleet management companies, Eclipx Group and McMillan Shakespeare (MMS), have agreed to a merger (with a capital M) which will create a mega-FMO and provide $50 million in synergies by creating scale in a business that is full of repetitive processes and duplication.
The deal was announced last week and according to the announcement,”The shareholders in each company continue to retain upside of their respective businesses, in addition to sharing in the growth opportunities and synergies of the combined group through their holdings in the merged group under MMS”.
SG Fleet made a failed bid for Eclipx Group in August 2018. The bid seemed opportunistic when the share price dived after a poor results announcement. But it was consistent with the industry mantra that consolidation was required and efficiencies would be achieved through scale.
Shortly after, rumours of another romance started. And it appeared that Eclipx was more interested in finding its own suitor than being forced into an arranged marriage.
MMS Chairman Tim Poole commented in the statement that, “We are delighted to announce the merger of two industry leading businesses to create a unique, diversified and best-in-class platform. We are confident in the strategic and financial logic of this combination and look forward to partnering with the highly skilled Eclipx team.”
Eclipx Chairman Kerry Roxburgh stated, “There is strong industrial logic for the proposed merger on the terms agreed between Eclipx and MMS, which provides a strong foundation for future success. The merger will ensure our shareholders retain exposure to the quality of the Eclipx portfolio, whilst also participating in the synergistic benefits that arise from a combination with MMS.
We strongly believe that this Merger represents a unique and compelling value creation proposition for both companies. As a Combined Group, we will deepen management capabilities, reinforce the balance sheet and, in turn, deliver stronger returns for shareholders.”
Both organisations have a history of acquisitions so the expected synergies should be achievable with the existing management team. There was no indication if the new entity will stick with the current brand portfolio or simplify it under the dominate market brand for each category.
Some of the benefits outlined with the merger are:
- Consolidation into one IT platform and the removal of duplication technology investments
- Supplier chain integration savings with greater purchasing power
- Greater opportunities for staff development
- Higher penetration of novated leasing with cross selling
- Improve end of lease return process using Grans Online platform
- Amalgamation of board and management structures
The table below from the merger presentation shows the vehicles under management for the main industry players. Once combined the new entity will be the largest group by a long way.
|Company||Novated Leases||Fleet Management||Total|
|Toyota Fleet Management||101,000||101,000|
|McMillan + Eclipx (post merger)||76,539||125,751||202,110|