During August SG Fleet made a takeover bid for Eclipx Group. It was reported the financial press on 19th August and a day later the Eclipx share price increased 13%.
The bid was rejected by Eclipx though comments from Super Group CEO (57% owner of SG Fleet) reported on Thursday 30th August suggested that the deal is still on the table.
Eclipx Chairman Kerry Roxburgh said, “The SG Fleet proposal is highly opportunistic and seeks to take advantage of the current weakness in Eclipx Group’s share price. It does not reflect the long term prospects and value inherent in Eclipx Group nor synergies available in any industry combination”.
SG Fleet is the largest fleet management organisation operating in Australia with an estimated 135,000 assets under management and 16% market share. Eclipx is number five with an estimated 99,000 assets and 12% market share. So combined they would ‘eclipse’ Leaseplan which is currently the second largest player with an estimated 116,000 assets locally.
Since becoming publicly listed both organisations have grown through acquisitions. SG Fleet has been purchasing companies with similar operations (nlc in Australia, Motiva in the UK) to increase scale. While Eclipx has been looking for acquisitions to control the end-to-end process for their customers (Grays Online, Right2Drive).
If combined there would be savings through economies of scale because both companies essentially offer the same services to customers.
At the SG Fleet results announcement over the last two years, Robbie Blau, SG Fleet CEO, has hinted there would be further acquisitions and consolidation in the local fleet management industry.
In 2017 Blau said, “As to our inorganic growth strategy, we are in good financial health and in a strong position to fund new strategic initiatives. If opportunities to build scale arise, we will not hesitate to investigate them,” Blau said.
In 2016 Blau said, “Scale is of paramount importance in this business and if opportunities that meet our acquisition criteria present themselves, we will not hesitate to actively pursue them”.
This activity has certainly got the financial press humming and both organisations have engaged consultants to guide them. So stay tuned for more information in the coming months.