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22.11.2017

New shareholders for Kiloutou

Private investment funds HLDI and HLD have entered into exclusive negotiations to acquire a majority stake in French general rental company Kiloutou. The main investor will be Dentressangle Initiatives, controlled by Norbert Dentressangle of the transport company that bears his name - but now largely in real estate, Jean-Claude Decaux of JCDecaux and Claude Bébéar- founder of AXA insurance.

The two funds have offered €1.5 billion for the shares currently held by private equity firms PAI Partners which owns 51 percent and Sagard from which it acquired its majority stake in 2011. Other investors are also understood to be joining the buyout, while the management team led by Xavier du Boÿs and Olivier Colleau will also retain its stake, as will founder Franky Mulliez and his family, the two parties held 30 percent of the equity between them. See Kiloutou sells control
See Kiloutou changes hands

The new investors are also planning to invest a further €500 million to fund further expansion of the business. Kiloutou has doubled in size over the past six years, and now boasts revenues of around €600 million making it the second largest rental company in France and one of the five largest in Europe. It has been expanding even more rapidly in the past two years, and acquired Italy's Cofiloc and Euronol in July, and the Polish operations of Spanish rental company Gam earlier this month and just last week it added French cabin rental company Landrau C.E.B to the group.

While it looks as though this deal will go ahead, given the wide support of all concerned it is rumoured that Loxam had made a higher bid, but from what we hear it is not being considered- assuming of course it was made in the first place. It would also have faced competition approval challenges.

Kiloutou was established in 1980 by Francis Mulliez and now employs 4,300 at 500 branches across France, Poland, Spain, Italy and Germany. Chief executive Xavier du Boÿs said: "I am delighted to be able to start a new stage in the development of this wonderful company with our new shareholders, with whom we share the same values. Together, we aim to build a broad European equipment rental business, focused on our mission: to simplify the lives of all our customers wherever they are. For this, we will continue to expand our service offering and improve the customer experience, particularly through our digital investments. We will succeed in this project by remaining faithful to our commitment to sustainable development, and keeping at the heart of our concerns the quality of the men and women of Kiloutou, who are the key to its success."

Jean-Bernard Lafonta, Partner and Co-Founder of HLD added: " HLD works with successful companies without a time constraint, this has been a very important factor in the choice of a new shareholder for Kiloutou: it allows the company to realise its European ambitions, and weather the economic cycles. We are delighted to be associated with the Kiloutou growth project, whose corporate culture is so special, based on a passion for the customer, a taste for performance and trust in people, reinforced by the impressive dynamism of the company. With the entrepreneurial spirit that drives HLD, we are confident that we can help the Kiloutou team to become the European leader in the sector. "

Antoine Ernoult-Dairaine of Sagard said: "Shareholders of Kiloutou since 2005, we are very proud to have accompanied it for more than 12 years through the various stages of growth of the group, first in France and then in Europe, as majority shareholder and then minority. These successes are to the credit of Kiloutou teammates, these women and men who animate the group on a daily basis with dynamism and an unparalleled state of mind. Our thanks also go to Franky Mulliez, the group management team and PAI for their trust."

Nicolas Holzman of PAI Partners added: “Over the last six years, Kiloutou has doubled in size, continuing to gain market share, diversifying its product lines and becoming a formidable acquisition platform. Kiloutou is today a European leader present in five countries. PAI warmly thanks the teams of Kiloutou, its leaders and our partners Franky Mulliez and Sagard for this great adventure of transformation ".

UPDATE
Jan 15th
The French competition authorities have approved Dentressangle Initiative's involvement in the transaction, based on the fact that it is not currently present in the equipment rental market.

Vertikal Comment

It looks as though the European rental market is hotting up still further, with Kiloutou- already very active on the acquisition trail and now receiving substantial funding and support for further expansion, while Loxam is clearly still very much on the lookout for more acquisition opportunities, as is TVH and to a lesser extent Boels. On the other hand two of the other big rental companies., Cramo and Ramirent appear to have tempered their appetite for takeovers – at least for now.

You can be sure that this recent spate of activity will stir others into action, while at least one or two of the current ‘acquirers’ will surely be keeping an eye on becoming a target for an even larger investor? United Rentals once had ambitions to move into Europe, and one cannot help thinking that Ashtead, might eventually consider adding a significant continental European business, in order to provide more trans Atlantic balance?

Who knows what might happen next,? Interesting times



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