Johannesburg - Listed transport logistics and mobility company Super Group has expanded its presence in the UK market through the acquisition of Fleet Hire for £25.7 million (R479.4m).
The acquisition was concluded by SG Fleet Group, a subsidiary of Super Group.
Fleet Hire is a provider of contract hire, salary sacrifice, short-term rental and fleet management services, employs 60 staff and has a fleet size of about 6 500 units.
Super Group said yesterday that the acquisition provided SG Fleet with critical mass in the attractive UK market and, in combination with its existing local business, created a profitable platform for continued growth.
Robbie Blau, the chief executive of SG Fleet, said Fleet Hire was an ideal fit for their long-term growth strategy in the UK.
Blau said SG Fleet would make a leap forward in its strategic agenda in the UK with the acquisition and establish the company as a recognised player in a number of segments.
“Most importantly, we do so in a profitable manner and by gaining access to additional local expertise,” he said.
Blau added that SG Fleet had looked at Fleet Hire carefully for some time and tested the proposition in the context of the UK’s current economic environment.
“We have a clear view on our long-term outlook in the UK and have gone about executing our plans in a very disciplined fashion.“
Blau said: “The acquisition meets all the strict criteria we have set for ourselves in terms of valuation and expansion of customer book and product range.
“Together with the invaluable expertise we access by retaining the commitment of the company’s management team, we have made a significant stride forward in this market,” he said.
The total purchase consideration comprised a purchase price of £19.6m and lease portfolio debt net of cash of £6.1m.
The total purchase consideration is 5.6 times Fleet Hire’s normalised earnings before interest, tax, depreciation and amortisation of £4.6m.
SG Fleet expects cash earnings a share accretion of 4.5 percent in its first full year of ownership of Fleet Hire, with further accretion in subsequent years.
The purchase consideration will be funded through the issue by SG Fleet of shares to the value of £1.8m to the vendors, with £12m of the outstanding balance funded through debt and the remaining £5.8m paid from cash on hand.
Fleet Hire, which has its headquarters near SG Fleet’s Solihull offices, will be consolidated with SG Fleet UK.
Fleet Hire’s management team led by chief executive Graham Hale will remain with the consolidated entity.
Blau said SG Fleet’s Novalease product had already been very successful in disrupting the local car salary sacrifice market.
He added that combining it with Fleet Hire’s broader salary sacrifice offering would give SG Fleet access to an additional customer base and a more comprehensive solution for existing SG Fleet drivers.
“We will have a more sizeable corporate offering, capable of servicing larger customers,” Blau said.
“Our planned diversification into the high-growth short-term rental segment will also be accelerated,” he added.
Shares in Super Group dropped 0.98 percent on the JSE yesterday to close at R39.40.