19.09.2003

Pinguely-Haulotte buys into French rental industry.

France-based lift equipment manufacturer Pinguley-Haulotte has signed an acquisition agreement for LEV, the access rental activity arm of truck rental company Fraikin. The terms and conditions of the deal have been agreed by both companies with completion targeted within six weeks.

The sale of LEV follows the acquisition of Fraikin (from Iveco-Fiat) in January of this year by Eurazeo, France’s largest publicly held private equity investor, in partnership with Pragma-Capital and UI (Credit Agricole), for a disclosed sum of €805 million (UK£560 million). It is understood that Eurazeo, which owns a controlling interest, and the Fraikin management wished to focus on its core business of truck and car rental.

LEV currently owns approximately 1,500 machines, a 180-strong workforce and approximately 30 rental locations spread throughout France, which for the last 20 years has constituted one of the country’s major platform rental networks. Despite unsettled economic conditions and a slight downturn on its previous year’s figure, LEV managed to finish the 2002 financial year with a revenue of €22.3 million (£15.54 million).

Speaking to Vertikal.net, Haulotte’s managing director Pierre Saubot said: “it was an opportunity for us. Some other rental companies had been looking at it, but none had made a serious offer. It was not good that one of France’s largest platform rental companies was in the ownership of a company that had no long term interest in the sector. LEV was Haulotte’s biggest customer, well run with a good reputation and a strong team, so I recommended to our board that we should make an offer and we succeeded.

“I saw what happened 15 years ago in Japan and more recently in the US,” continued Saubot, “when a few very large rental companies dominated the market and then damaged the manufacturers. I could see something like this happening in Europe with all the consolidation going on.”

It is hoped that the LEV acquisition along with its established presence in the French rental market, will enable Haulotte, now one of the world’s top three manufacturers of access and lift equipment, to expand its products and services throughout France, and ultimately bring the manufacturer closer to the end user market and help it to adapt to future technological and regulatory changes. “I think Caterpillar got it right if you look at their share price today,” said Saubot. “I am sure it would not be that way if they were just a manufacturing company."

Saubot also told Vertikal.net that he realised that initially there might be some anxiety from rental companies; “In the long run, however, it is not good for their business to buy higher priced machines with poor service back-up just because we own a rental company. All of the other manufacturers rent or support rental companies. We are just more open about it with this move.

“We can help the industry by setting good business practices,” said Saubot. “LEV has a good reputation. It is not one of the companies that started extreme price cutting and other uncommercial practices. Renting at non-commercial rates is not good in the long run for the end user. What is important is that he/she gets good up-to-date products that are well serviced, are readily available and are delivered on time. LEV is already known for these factors and these policies will only get stronger under Haulotte. We can help stabilise the industry.”

All future operations under Haulotte will have the full support of LEV’s existing management structure, including Bernard Pointet LEV's president and general manager.

At present there are no specific plans to introduce Haulotte’s rental strategy overseas in the short to medium term, but a move abroad from its native France has not been totally ruled out. Fraikin will continue to focus its interests on its core business of industrial and utility vehicle rental.