14.12.2016

Loxam trumps TVH in Lavendon bid

Loxam has said that it will make a formal cash offer for Lavendon of £2.20 a share and has gained the support of the Lavendon board for its bid.

The offer which has yet to be formally posted by the London Stock Exchange, values the company at £374 million - or £532 million when the group's net debt is factored in - topping the TVH offer by £26 million. It is however still below the recent share price - which moved up past £2.30 this morning. TVH immediately responded by dropping its ‘final offer’ clause for its £2.05 a share offer and may well announce a counter bid. It has issued a formal statement asking Lavendon shareholders not to do anything at this stage while it considers its options.

The Loxam offer depends on it receiving just over 50 percent of the equity and is not conditional on any regulatory approvals.

Loxam president Gerard Deprez said: "The combination of Lavendon and Loxam
represents a unique opportunity to build an unrivalled leader in the European aerial work platforms rental market. Loxam has followed Lavendon for a number of years and has been impressed by its management team and the numerous leadership positions it now holds in several markets.

"The acquisition of Lavendon is consistent with Loxam's strategy to build a geographically diversified business, increase its market shares in countries where the group is already present, and further develop in specialised areas, such as aerial work platforms. The two groups are highly complementary in Europe, and Lavendon's Middle Eastern business will provide the combined entity with opportunities in growing markets.

"The discussions with the board of Lavendon have been very constructive, and Loxam has always had the objective to obtain the full support of Lavendon's board. Loxam is looking forward to working with the Lavendon team and continuing to build a successful business."

Lavendon chairman John Standen added: "Lavendon is a company in robust health, uniquely positioned across diverse geographic markets, with strong revenue growth, cash flow and ROCE In reaching its decision, the Lavendon board has considered in great detail the best interests of all shareholders and the company as a whole. We believe that Loxam's all-cash offer provides Lavendon's shareholders with an opportunity to realise significant value at an attractive premium to the pre-offer period share price, whilst securing early delivery of the Lavendon group's potential against a backdrop of increased economic uncertainty. This is why the Lavendon directors unanimously intend to recommend Loxam's offer.”

"Loxam is the largest equipment rental company in Europe with a strong management team who share our belief in the strengths of our people and our growth drivers. We are confident that they are the right partner to take Lavendon to the next chapter of its growth story."

UPDATE
Loxam has arranged for its formal offer to be posted to all shareholders today- December 15th. The offer will close on January 17th, by which time the company hopes to have gained over 50 percent of shareholder acceptances - it already has the agreement of board members and at east one significant shareholder.

Vertikal Comment

This move by Loxam not only escalates the battle to gain control of Lavendon, but is also a battle for market leadership in the growing European aerial lift market. Both companies are now prepared to take over Lavendon with a holding as small as just over 50 percent. IF that were to happen the Loxam bid would probably offer more opportunities for those Lavendon shareholders who decided to hang on in there.

The Loxam bid will also have a major impact on Loxam itself, not only making it Europe's first €billion equipment rental company, but almost certainly changing the way the group is managed - it currently functions as a somewhat centralised private French business - rather than as an international publicly quoted corporation and this will certainly change under the influence of the Lavendon management team.

If TVH wins it will simply absorb the Lavendon businesses into its rental division. Certainly taking advantage of the wider geographic coverage that it brings, but the Lavendon business is unlikely to have any significant impact on TVH as a whole.

Interesting times, but the fat lady has yet to sing.