Societe Generale Announces Ald’s Proposed Acquisition of Leaseplan
to Create a Leading Global Player in Mobility
SOCIETE
GENERALE
ANNOUNCES ALD’S
PROPOSED ACQUISITION OF
LEASEPLAN TO
CREATE A
LEADING GLOBAL PLAYER
IN MOBILITY |
|
|
|
Press release
Paris, January 6th 2022, 6:45am
Societe
Generale
announces the
signing by
Societe Generale
and ALD of
two
Memorandums
of Understanding
under which
ALD
would
acquire
100%
of LeasePlan from
a consortium led by TDR
Capital,
to create a
leading
global
player in
mobility with a total combined fleet of
around 3.5
million
vehicles1(1):
-
The
proposed
acquisition
of
LeasePlan
for a total consideration of
EUR
4.9bn2(2)
would be made
through a
combination
of shares
and
cash;
-
Societe
Generale
would commit to
remain the long-term majority shareholder of
the combined entity
(“NewALD”)
with
a
~53% stake at
closing,
LeasePlan
shareholders
holding
30.75%.
This
transformative
project would
be a
step-change
towards creating a leading global
player in
mobility,
benefiting from
highly
compelling
complementary
capabilities
and
synergies.
Benefitting
from materially
increased
investment
firepower and
differentiated
know-how,
the combined entity will be particularly
well-positioned to take full
advantage of
the
industry’s
underlying basic
trends,
including
the shift from
vehicle ownership to usership and
to electric vehicle fleets,
as well as
the
growth
of digital
technologies to enrich services
provided.
This project
would be perfectly coherent with the
corporate purpose
of the
Societe Generale
group and its ambition
notably to
actively support economies as well as our customers in their energy
transition.
This
foreseen
acquisition
would
be highly
value-creating for
shareholders,
with
net
earnings
per share accretion
of
~+20%3(3)
for
NewALD
in
2023,
as well as
>+5%(4)
for
Societe
Generale
from
2024.
Societe
Generale would
benefit from a
~80bps4(5)
ROTE
uplift
in
2024.
At Group level, the
capital impact at
closing is expected
to be
around
-40bps5(6).
This
intended
transaction
is
perfectly aligned
with the Group's strategy
to preserve its disciplined and
balanced
capital
allocation policy,
combining
the financing
of growth
of its businesses, in priority
its
most profitable
businesses,
with an attractive dividend policy based upon
a 50%
pay-out-ratio
of the
Group’s underlying
net
income6(7).
Frédéric
Oudéa, Chief Executive Officer of
Societe
Generale,
comments:
“This proposed transaction is a major step for
ALD and for the Societe Generale group. Over the past 10 years,
thanks to long-term vision and rigorous execution, we have
positioned ALD to take advantage of the tremendous growth potential
in the sustainable mobility market. In line with Societe Generale
group’s corporate purpose and notably to actively support economies
as well as our customers in their energy transition, the combined
entity will aim to become, in the medium term, a third pillar
alongside, on one hand, the retail banking and insurance, and on
the other hand, corporate and investment banking businesses,
reinforcing the balance of the Group’s business model. More
generally, this proposed acquisition is fully in line with the
Group’s strategy to deliver profitable and sustainable growth and
strong value creation for its shareholders.”
Two industry leaders join
forces at the forefront
of the
industry transformation
ALD is a global leader in mobility solutions
providing full-service leasing and fleet management services across
43 countries with a total fleet of 1.7 million vehicles. It has a
proven track record in fleet growth (+4% fleet CAGR7(1) ),
profitability (~16% of ROE(1)) and efficiency (48% cost-to-income
in 9M 21).
LeasePlan is a leading fleet management and
mobility company worldwide with a total fleet of 1.8 million
vehicles8(2) and an extensive offer making it the perfect fit for
ALD to shape the industry’s transformation.
The proposed combination of the two companies
would create a leading global player in mobility with a total fleet
of 3.5 million vehicles(2). This transaction would provide key
advantages: a global offer and coverage of all client categories,
an increased breadth in terms of products and services, and a large
and balanced geographic coverage. These would enable NewALD to
anticipate future market needs and meet client expectations with
industry-leading operating efficiency and optimised
procurement.
Ideally positioned in a fast-growing market
supported by strong underlying megatrends, NewALD would have a
unique opportunity to:
- Lead the
data-driven digital transformation of the sector
- Drive the shift
towards usership on all fronts: B2B, B2C and even B2E9(3)
- Accelerate the
transition towards low-emissions and sustainable mobility
The enhanced firepower to invest and develop new
mobility products and ancillary services would allow NewALD to
build new digital business models based on core value chain
competencies and state-of-the-art digital solutions across client
categories, products, and services.
By establishing new global partnerships around
new services for Electric Vehicles, NewALD would accelerate the
deployment of multi-cycle, flexible and multi-modality solutions,
ensure faster time-to-market for innovative sustainable mobility
solutions and lead the fair transition towards Electric Vehicles
for both corporates and individuals.
Powered by an enlarged offering, value-added
complementarities, and with an ability to embrace megatrends,
NewALD would be well-placed to capture new growth opportunities
across all client categories and lift annual fleet growth to at
least 6% post-integration.
Strong
value creation
for ALD
NewALD would target an improved cost-to-income
ratio of ~45%10(4) in 2025 (versus 46-48% cost-to-income target as
described in Move 2025 on a stand-alone basis) thanks to a
combination of scale effects and cost synergies. Operational and
procurement synergies are estimated to reach an annual pre-tax run
rate level of about EUR 380m. These strong cost synergies are
expected to be fully achieved in 2025. Restructuring costs,
estimated at ~1.25 times the annual run-rate synergies before tax,
are expected to be incurred in 2023 and 2024.
In 2023, with the benefit of these foreseen
fully phased synergies and excluding restructuring charges, the
accretion of NewALD normalised earnings per share should be around
20%11(1).
NewALD aims to have a robust capital position.
As a regulated institution in the future, NewALD would target a
~13% CET1 ratio and a Total Capital ratio of 15-16%.
Strong solvency and profitability at closing
would secure funding for future growth while maintaining a 50%-60%
pay-out ratio.
An
accretive
and
transformative
transaction for
Societe
Generale
This highly accretive proposed transaction for
ALD would generate value for Societe Generale. It is perfectly in
line with Societe Generale’s strategy to selectively allocate more
capital to the most profitable and growing businesses and position
as a leader in sustainable mobility.
The expected impact on CET1 ratio at closing
would be around -40 bps12(2). The Group remains committed to
managing its CET1 ratio with a buffer above 200 bps over MDA at any
point in time and confirms its distribution policy of 50% of
underlying Group net income13(3).
As a result, this proposed combination is
expected to be highly accretive for Societe Generale with an
improved earnings per share expected at >+5%14(4) from 2024. The
ROTE should increase by ~ +80bps15(5) and the Return on
Investment should reach >16% in 202416(6).
Key transaction
terms
ALD would acquire 100% of LeasePlan through a
combination of shares and cash for a total consideration of
EUR 4.9bn17(7). LeasePlan’s shareholders would receive shares
representing a pro forma stake of 30.75%18(8) in ALD’s share
capital at closing and EUR 2.0bn in cash (financed by ALD through a
~EUR 1.3bn rights issue and the use of around ~EUR 0.7bn of surplus
capital). LeasePlan’s shareholders would commit to a 12-month
lock-up post closing, followed by a 24-month period with orderly
sale provision.
Societe Generale intends to remain the long-term
majority shareholder of ALD (it would commit to a 40-month lock-up
post closing). Societe Generale would underwrite the ~EUR 1.3bn
rights issue and retain a ~53%19(1) stake in ALD’s share capital at
closing.
LeasePlan shareholders would also receive
warrants that should increase their pro forma stake up to 32.9% in
case of exercise (EUR 2.0 strike price per share, 1 ALD share for 1
warrant, exercisable 1 to 3 years after closing, if ALD’s share
price20(2) increases by at least 30%).
As part of the proposed acquisition of
LeasePlan, ALD would apply for regulated status (Financial Holding
Company), which will allow Societe Generale to recognize minority
interests in NewALD from a regulatory perspective.
Societe Generale and LeasePlan are foreseeing
the execution of a shareholding agreement.
The proposed transaction has received the
support of Societe Generale’s, ALD’s and LeasePlan’s Boards of
Directors, as well as LeasePlan’s Supervisory Board, and is subject
to information and consultation of relevant works councils. The
closing of the transaction is subject to customary closing
conditions. The main closing conditions are (i) the regulatory and
antitrust approvals, (ii) the waiver by the AMF to the obligation
to file a tender offer on ALD granted to LeasePlan’s shareholders,
(iii) the shareholders meeting of ALD, (iv) the distribution by
LeasePlan of its excess capital and (v) the delivery by each of ALD
and LeasePlan of a pre-agreed Net Asset Value at closing allowing
the combined entity to reach a CET1 level of c. 13%. The proposed
transaction is expected to close by the end of 2022.
Conference
callAnalyst conference call: Frédéric Oudéa,
Chief Executive Officer of Societe Generale, Diony Lebot, deputy
Chief Executive Officer of Societe General and Chairman of the
Board of ALD, and Claire Dumas, Chief Financial Officer of Societe
Generale, accompanied by Tim Albertsen, Chief Executive Officer of
ALD, will comment on the project during an analyst conference call
in English today at 10:30 a.m. Paris time
(CET). This conference call will be accessible
via webcast, live and replay for one year from this link
https://edge.media-server.com/mmc/p/oc2u7n48.
Press
contacts
Jean-Baptiste Froville_+33 1 58 98 68 00_
jean-baptiste.froville@socgen.com
Fanny Rouby_+33 1 57 29 11 12_
fanny.rouby@socgen.com
About
Societe
Generale
Societe Generale is one of the leading European
financial services groups. Based on a diversified and integrated
banking model, the Group combines financial strength and proven
expertise in innovation with a strategy of sustainable growth,
aiming to be the trusted partner for its clients, committed to the
positive transformations of society and the economy.
Active in the real economy for over 150 years,
with a solid position in Europe and connected to the rest of the
world, Societe Generale has over 133,000 members of staff in 61
countries and supports on a daily basis 30 million individual
clients, businesses and institutional investors around the world by
offering a wide range of advisory services and tailored financial
solutions. The Group is built on three complementary core
businesses:
- French Retail
Banking, which encompasses the Societe Generale, Crédit du
Nord and Boursorama brands. Each offers a full range of financial
services with omnichannel products at the cutting edge of digital
innovation;
- International Retail Banking,
Insurance and Financial Services to Corporates, with
networks in Africa, Russia, Central and Eastern Europe and
specialised businesses that are leaders in their markets;
- Global Banking and Investor
Solutions, which offers recognised expertise, key
international locations and integrated solutions.
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Disclaimer
This press release includes certain projections
and forward-looking statements with respect to the anticipated
future performance of the combined group.
Such information is sometimes identified by the
use of the future tense, the conditional mode and forward-looking
terms such as "estimates", "targets", "forecasts", "intends",
"should", "has the ambition to", "considers", "believes", "could"
and other similar expressions. This information is based on data,
assumptions or estimates that Societe Generale believe are
reasonable. Actual future results may differ materially from those
projected or forecast in the forward-looking statements, in
particular due to the uncertainties as to whether the synergies and
value creation from the transaction will be realized in the
expected time frame, the risk that the businesses will not be
successfully integrated, the possibility that the transaction will
not receive the necessary approvals, that the anticipated timing of
such approvals will be delayed or will require actions that will
adversely affect the anticipated benefits of the transaction, and
the possibility that the transaction will not be completed.
All forward-looking statements contained in this
press release are expressly qualified in their entirety by the
cautionary statements contained or referred to in this disclaimer.
Each forward-looking statement speaks only at the date of this
press release. Societe Generale makes no undertaking to update or
revise any information or the objectives, outlook and
forward-looking statements contained in this press release or that
Societe Generale otherwise may make, except pursuant to any
statutory or regulatory obligations applicable to Societe
Generale.
No statement in this press release is intended
as a profit forecast or estimate for any period. Persons receiving
this press release should not place undue reliance on
forward-looking statements.
This press release is for informational purposes
only and is not intended to and does not constitute an offer or
invitation to exchange or sell, or solicitation of an offer to
subscribe for or buy, or an invitation to exchange, purchase or
subscribe for, any securities, any part of the business or assets
described herein, or any other interests or the solicitation of any
vote or approval in any jurisdiction in connection with the
proposed transaction or otherwise.
This press release should not be construed as a
recommendation to any reader of this press release. The press
release is neither a prospectus, product disclosure statement or
other offering document for the purposes of Regulation (EU)
2017/1129 of the European Parliament and of the Council of 14 June
2017, as amended from time to time and implemented in each member
state of the European Economic Area and in accordance with French
laws and regulations
(1) Excluding Australia / New Zealand sold by
LeasePlan.(2) Based on €12.12 per share for ALD (1-month VWAP on
Euronext as of 27 Oct 21, date of publication of press release
after market close confirming discussions concerning a potential
combination) and excluding warrants. Based on LeasePlan book value
of ~EUR 3.5bn at closing, subject to minor adjustments.(3) Computed
based on 2023E net income group share post AT1 cost, including
fully phased run rate synergies, excluding restructuring costs and
at constant perimeter. ALD standalone 2023E EPS adjusted for
capital increase, based on 2023 consensus as of 27 October 2021
(FactSet).(5) Computed based on 2024E net income group share post
AT1 cost, including fully phased run rate synergies and excluding
restructuring costs, divided by average tangible shareholders’
equity.(6) Q3 2021 pro-forma.(7) After deduction of interest on
deeply subordinated notes and undated subordinated notes.(1) Since
2017.(2) Excluding Australia / New Zealand sold by LeasePlan.(3)
Business to Employee.(4) Computed as: Total overheads / Gross
margin (excluding used car sales result and cost of risk).(1)
Computed based on 2023E net income group share post AT1 cost,
including fully phased run rate synergies, excluding restructuring
costs and at constant perimeter. ALD standalone 2023E EPS adjusted
for capital increase, based on 2023 consensus as of 27 October 2021
(FactSet).(2) Q3 21 pro forma.(3) After deduction of interest on
deeply subordinated notes and undated subordinated notes.(4)
Computed based on 2024E net income group share post AT1 cost,
including fully phased run rate synergies and excluding
restructuring costs, based on 2024 consensus as of 27 October 2021
(FactSet).(5) Computed based on 2024E net income group share post
AT1 cost, including fully phased run rate synergies and excluding
restructuring costs, divided by average tangible shareholders’
equity.(6) Calculated as the incremental 2024E net income for
Societe Generale, including fully phased run rate synergies,
excluding restructuring costs, divided by allocated capital from
Societe Generale standpoint defined as 11% of incremental
consolidated RWA under Basel III plus created goodwill and
intangibles at Societe Generale minus recognised minority interests
& other effects. ROI equivalent to ~14% under Basel IV.(7)
Based on €12.12 per share for ALD (1-month VWAP on Euronext between
as of 27 Oct 21, date of the press release confirming discussions
concerning a potential combination, published by Societe Generale
after market close) and excluding warrants.(8) Ownership structure
before exercise of warrants awarded to LeasePlan’s shareholders
(representing c.3% of the issued share capital of ALD at closing);
fully diluted ownership post warrant exercise: c. 51% for Societe
Generale, c. 33% for LeasePlan shareholders and c. 15% for the free
float.(1) Ownership structure before exercise of warrants awarded
to LeasePlan’s shareholders (representing c.3% of the issued share
capital of ALD at closing); fully diluted ownership post warrant
exercise: c. 51% for Societe Generale, c. 33% for LeasePlan
shareholders and c. 15% for the free float.(2) Based on ALD’s fully
undisturbed share price, adjusted for the proposed rights
issue.
- Societe Generale_ Acquisition of LeasePlan
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