Auto Remarketing Canada Editor
Toronto-based Element Financial Corp. announced today that it is purchasing GE Capital’s remaining fleet operations in the U.S. and Mexico, and Australia and New Zealand — an all-cash deal worth $8.6 million in Canadian dollars.
Element had previously acquired the Canadian operations of GE Capital’s North American fleet management business in June of 2013.
“Adding these very high quality businesses to our existing fleet operations firmly establishes Element as a leader in the North American fleet management industry,” said Steven Hudson, Element’s chief executive officer. “But more importantly, by combining these businesses we’re being given an unprecedented opportunity to bring together the systems, technologies, products and people that have helped to define excellence in the fleet management industry in North America for more than five decades.”
Though the transaction is subject to regulatory and other approvals, the U.S. & Mexico transaction is expected to close in the third quarter of 2015, and the Australia and New Zealand transaction in the fourth quarter of 2015, subject to the receipt of these approvals.
If all goes well, on the closing of the transaction Element’s combined fleet management operations will include more than 1 million vehicles under contract and net earning fleet assets of more than C$13 billion. The company’s total assets will exceed C$21 billion.
Highlighting a few specifics regarding the transaction, on top of the purchase of the net earning assets in the U.S., Mexico, Australia and New Zealand, the transaction also includes the transfer of the employees, systems, offices, agreements, intellectual property and other assets required to operate the acquired fleet management businesses in these jurisdictions, the company explained.
In other news stemming from Element today, the company confirmed that Paris-based Arval — a wholly-owned subsidiary of BNP Paribas and Element’s founding partner in the Element-Arval Global Alliance — has entered into a memorandum of understanding to acquire GE Capital’s European fleet operations.
“Together, these two transactions signal a new level of collaboration between Element and Arval in serving the global fleet management needs of international customers,” company management shared.
Upon the closing of these two deals, the Element-Arval Global Alliance will now be capable of managing customer fleets in more than 40 countries.
“We see the opportunity to expand our fleet management operations into Australia and New Zealand as an excellent fit with our established North American operations,” said Bradley Nullmeyer, Element’s president. “In addition to strengthening our ability to support international fleet customers through these transactions, we believe the economic scale of Element’s expanded fleet management enterprise will enable us to accelerate the development and deployment of the next generation of advanced fleet analytics and data benchmarking tools.
“These expanded and enhanced service offerings will further differentiate Element Fleet Management in the market and deliver incremental cost savings for our fleet customers.”
The North American-based portion of the GE portfolio represents C$5.3 billion of the net earning assets acquired by Element, and the Australia and New Zealand-based portions represents C$1.8 billion.
The transactions will be an ongoing process as the companies have entered into a transition services agreement between Element and GE under which GE will provide various services during the transition period, ensuring a smooth transition for customers.
The company explained integration plans will be finalized prior to closing in an effort to align the fleet management operations of the two companies.
“While the continued consolidation of the North American industry will present further opportunities for the Company, management’s focus and discipline will be on delivering value to our shareholders and customers through the integration of these acquired GE fleet operations,” said Hudson.