Bidvest buys fleet manager Eqstra from enX
Bidvest Bank will settle the purchase price, and target company’s debt will be refinanced as part of the deal, the buyer says
Bidvest, the top 40 services and distribution group worth R65bn, is hoping to use its strong capital position to turn around the fortunes of Eqstra Fleet Management Logistics as it also looks to expand its own operations.
Bidvest said on Monday it had agreed to buy Eqstra Fleet Management and Logistics from enX in a deal worth R3.1bn. enX has been trying to sell Eqstra since October 2018, after its board decided it could do no more to enhance the operations of the company it had bought in 2016.
“The acquisition of Eqstra is in line with Bidvest’s stated strategic intent to focus Bidvest Bank on its fleet management niche,” the services, trading and distribution group founded by Brian Joffe said on Monday.
Bidvest, whose brands include Rennies Travel and motor retailer Bidvest McCarthy, said it could offer a "cradle-to-grave fleet solution through Bidvest Bank and the automotive division”.
“The acquisition will create funding, scale and operational efficiencies and result in a more balanced fleet exposure,” it said.
A spokesman at Bidvest said the company was uniquely positioned with a banking licence, the ability to source services as well as to provide its own services.
"We can capture the entire value chain," the spokesperson said.
Bidvest's management team could not be reached for comment.
Eqstra is a fleet-leasing and management-solutions business focused mainly on the corporate sector. At end-August 2018 it had 12,300 vehicles under lease. Leasing assets totalled R2.6bn and the company’s annual profit after tax was R143.9m.
The purchase price would be settled by Bidvest Bank, and Eqstra’s debt will be refinanced as part of the deal, Bidvest said.
The deal will likely be completed towards the end of 2019, assuming the necessary approvals were secured in time, it added.
In October 2018, enX said it was looking to offload Eqstra, “which may be better suited under a different structure so as to optimise its value proposition”.
The company said on Monday that Bidvest was well placed to provide Eqstra “with value-enhancing opportunities via access to a larger pool of capital at a lower cost and to an existing national motor vehicle distribution network”.
“The board is in the process of considering the optimal application of the cash proceeds arising from the transaction,” it said.
Eqstra “is a good fit for Bidvest Bank”, said Cratos Wealth portfolio manager Ron Klipin. The company is one of the largest fleet managers in SA and is “a quality asset”.
The deal would also help enX to reduce debt, Klipin said.
Bidvest’s shares were 0.2% down at R193.26 in mid-morning trade on Monday. The price closed 0.51% lower at R192.58. Shares in enX rose 4.3% to R12.25 following the announcement and settled at R12.50 a share.
Bidvest said in June that it had made several bolt-on acquisitions, and “a few larger-sized acquisitions are being pursued”.