10.06.2019

Loxam bids for Ramirent

France’s Loxam has launched bid to acquire Finnish international rental company Ramirent.

The two companies have entered into a ‘Combination Agreement’ in which Loxam will make public cash tender offer for 100 percent of the equity in Ramirent. The deal will see Loxam offer €9:00 per Ramirent share, which would total €970 million plus assumed debt, which at the end of March was €423.6 million, thus valuing the business at almost €1.4 billion. The offer represents a premium of 65.4 percent over the closing price for Ramirent shares on Friday. The deal will create a truly pan European rental business with revenues in excess of €2.2 billion, with over 1,000 locations and almost 11,000 employees.

The Ramirent board has unanimously decided to recommend the offer to shareholders. However Ramirent’s major shareholders Nordstjernan and Oy Julius Tallberg, along with chief executive Tapio Kolunsarka and chief financial officer Jukka Havia, which together represent almost 32 percent of Ramirent’s equity have agreed to accept the offer subject to customary conditions. However the deal does depend on Loxam gaining control of more than 90 percent of the outstanding shares in the company.

Loxam chief executive Gérard Déprez said: "The combination of Ramirent and Loxam represents a unique opportunity to build a truly pan-European leader in the equipment rental market. Loxam has known, followed and highly regarded Ramirent for a number of years, and appreciates its experienced management team and employees, as well as its strong positions in all the markets where it operates. The acquisition of Ramirent is consistent with Loxam's strategy to build a geographically diversified business, with improved scale, able to better serve its clients. The combination brings together two strong and financially resilient groups which are fully complementary.”

“Loxam appreciates the unanimous support from the board of directors of Ramirent and its largest shareholders for its Tender Offer and Loxam is looking forward to working with the Ramirent's management team and employees and continuing to build with them a successful business."

Ramirent chairman Ulf Lundahl added: "Founded in 1955, Ramirent has developed into an equipment rental company with leading market positions in the Nordic region and in Eastern Europe. The Board of Directors is proud of what Ramirent has accomplished and we are thankful for the achievements of the management team and the engagement and hard work of all employees. The offer from Loxam will create a truly pan European equipment rental company with an extensive offering, a well-diversified business mix and a platform for future growth to serve both client needs and employee development. Furthermore, the price offered by Loxam presents an attractive cash premium to our shareholders. With a history of making acquisitions and integrating companies I believe Loxam offers a good home for Ramirent."

Ramirent chief executive Tapio Kolunsarka added: "Together with our exceptionally engaged employees, we have decisively improved our operations and doubled earnings per share, while successfully solidifying our leading market position in Northern and Eastern Europe over the past three years. Loxam's offer, at a substantial premium to the current share price, proves their strong belief in Ramirent's future value creation potential. With our leadership position in all of our markets in Scandinavia, Eastern Central Europe and the Baltic countries Ramirent is ideally positioned to drive growth in equipment rental and related services. Under the ownership of Loxam, which possesses long-term track record of strong growth, I am confident that Ramirent has the possibility to further accelerate its growth and development and add important Nordic and Eastern European dimension to Loxam's international presence."

Nordstjernan chief executive Peter Hofvenstam, speaking on behalf of major shareholders Nordstjernan Oy Julius Tallberg: said: "The combination creates the pan-European leader and is based on clear industrial logic that enables Ramirent to take the next step, providing access to a larger customer base and a strong global platform. We find Loxam's offer of €9.00 per share to be attractive and we have therefore decided to give the offer our backing by undertaking commitments to accept the offer."

The offer will formally open on June 19th and close on July 18th

Vertikal Comment

This came as something of a surprise this morning, it is unusual for such a large acquisition to be kept so quiet. Loxam is taking no risks with this deal, offering a substantial premium and winning the approval of Ramirent’s major shareholders and senior managers in advance. We would imagine that Rami’s regular shareholders will snap its hand off and accept this deal without hesitation, particularly given the weak first quarter results.

Assuming the deal goes through it will provide Loxam with exceptionally strong coverage of the European market, adding a very strong presence in Finland and Sweden to its existing network, while also taking it into the Baltic states, Czech Republic, Slovakia and Poland, along with a joint venture in Russia and the Ukraine. It will also significantly strengthen its coverage in Norway, particularly when Rami’s €75 million acquisition of Stavdal is completed.

The move will also reduce the percentage of Loxam revenues coming from France from the current 55 percent, to less than 40 percent.

The challenge of course will be what integration strategy to follow, Loxam has not always excelled in this area. If past examples are anything to go by it will probably leave everything as it is for now. Although having paid a substantial premium for the business - no matter what form of valuation you use - the company will surely want to benefit from some significant synergy gains, while making it easy for each company’s customers to work throughout the combined group?

Loxam remains a private company, with private equity firms only holding a minority stake, while the management retain a substantial majority holding, allowing it to take a longer term more strategic view of its investments.

If the merger goes smoothly Loxam would be an ideal candidate for companies such as United Rentals or even Ashtead, that might be looking to expand internationally without the cost, risks or time of doing it through smaller acquisitions or greenfield start-ups, thus providing a lucrative exit strategy for the senior managers.

An interesting move.