WRITTEN

EXAM BUSINESS AND CORPORATE STRATEGY - CASE MATERIAL

Prof. dr. M. Dooms

Exam period: 1st session– (January 22nd, 2022)

Academic year: 2021-2022





LOTS OF SUCCESS !!!!!












CASE:

CAR LEASING INDUSTRY – MERGER ALD & LEASEPLAN

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EXHIBIT 1: Pre-Merger Article

Mergers Wheels-Donlen, ALD-LeasePlan: What’s next?

Last week, two major stories set the fleet and mobility industry abuzz. On
Wednesday, LeasePlan and ALD Automotive confirmed they are discussing a
merger. On Thursday, Donlen and Wheels Inc. announced they had in fact just
merged. Each story could have far-reaching implications, and put together, they
may point to a larger trend. So, what to make of them? Here are our thoughts and
questions, and last but not least, some first reactions from fleet customers.

To better identify and understand the impact of the two events, we have pictured
the current presence of the 4 companies and their alliance on a world map: ALD
Automotive, LeasePlan, Donlen, Wheels Inc.

1. Our thoughts

Two differences, one common motivator

On the face of it, both stories point to an accelerated consolidation in the fleet and
mobility industry, and more particularly in the vehicle leasing and fleet
management sector. But there are some important differences.

Firstly, there is geography. Although there is some overlap, these stories are
mostly relevant in different regions. LeasePlan and ALD are global players, but

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with a European focus. Donlen and Wheels Inc are important players in North
America.

Secondly, there is a difference in finality. The Donlen-Wheels merger is done and
dusted. It’s a fact. ALD and LeasePlan, however, are still in talks – and the outcome
of those talks could still take various shapes. A straight merger is an option, but
it’s not the only one (but more of that later).

Having said that, we do see a common motivator behind these two stories. And it
is that leasing and fleet management companies, especially in the industry’s two
most important and mature regions, have a strong need and a clear interest in
seeking economies of scale.

We are in a transformation towards sustainable mobility – a process that is urgent,
vital and costly. If mobility providers want to continue delivering quality services
and products in the global mobility arena, they must achieve economies of scale –
both operationally and financially.

Donlen-Wheels: interesting, promising, logical

Now let’s take a look at the Donlen-Wheels merger. Considering the configuration
of the North American fleet market, this is a move that’s interesting, promising,
and even logical.

In March 2021, Hertz sold Donlen to Athene Holding, a financial and retirement
services company. Donlen is a fleet management company with approximately
304,000 vehicles in portfolio. That’s a reasonable size, but still well behind
Element Fleet Management for example To compete in that market, which is
highly competitive and dominated by open-end lease, you need size and scale.

And that’s what Athene Holding has achieved: combining Donlen with Wheels Inc
results in a fleet size of about 550,000 vehicles. This will increase leverage and
facilitate investment, notably regarding sustainability and fleet electrification,
topics that surely will only become more prominent in 2022, also in vehicle fleets
in the U.S.

What’s even more interesting: both fleet management companies are customer-
driven and have complementary customer portfolios. Donlen has over 50 years’
experience with truck, pickup and LCV fleets, with an increasing focus on
telematics. Wheels Inc has experience with car-focused, sales-driven fleets of
pharmaceutical companies and the like, and is known for the quality of its service.

So, this marriage benefits both fleet management companies, but also holding
company Athene, and the fleet customer – on the condition that the merger
manages to maintain the distinct culture of each company, and keeping in mind
that there is a clear difference of mentality between Athene Holding, which is
publicly listed; and Wheels Inc, which has always been a privately-owned
company.

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Shlomo Crandus, the CFO of Wheels Inc, has been appointed the new CEO of the
Donlen-Wheels combination, so the Wheels culture at least seems to be secure for
now.

ALD-LeasePlan: the big beast, with a big if

Now let’s head over to Europe for a closer look at the announcements by
LeasePlan and ALD Automotive.

The fact that LeasePlan is up for sale is one of the worst-kept secrets in the
industry. Rumours to that effect started circulating shortly after the company’s
failed IPO in October 2018. Just in April of this year, reports that both ALD and
Santander, the Spanish banking giant, were both – separately – interested in
acquiring LeasePlan were neither confirmed nor denied by all parties involved.

ALD Automotive had a rather more successful IPO in 2017. It has since positioned
itself at the forefront of several trends transforming mobility worldwide, and has
entered into partnerships with OEMs1, startups and mobility specialists. ALD’s
aim is to become the biggest leasing and business mobility provider, covering at
least 50 countries by 2025. It now covers 43.

In short, ALD – and its main shareholder Société Générale – certainly have an
appetite for expansion and growth, while LeasePlan is looking for “What’s Next” –
its former adage.

From that perspective, the deal seems logical. But let’s not forget that it’s far from
realised. And even if an agreement is reached, there’s still a big if: it will face
significant obstacles from the regulators, both nationally and internationally.
Because the combination of the ALD fleet (1.7 million vehicles in 43 countries)
with the LeasePlan one (1.8 million in 30) countries would create such a big beast
that it risks setting off all kinds of anti-trust and monopoly alarm bells.

To put it in tech terms, an ALD-LeasePlan merger is a bit like Microsoft and Apple
getting hitched. To illustrate the point: in the Nordics and in some Southern
European countries, the combination of both lease companies would have a
market share of between 60% and 70%. It seems likely that regulators would only
allow an overall merger if ALD and/or LeasePlan would dismantle or sell off
certain activities in those markets.

Given the complexities of this deal, we don’t expect much movement in the
upcoming weeks, or even months. However, the fact alone that both parties
confirm that they’re talking means they are more than ‘just talking’. “It’s a sign that
the advantages of this deal outweigh the disadvantages, for both parties”, says
Global Fleet expert Pascal Serres.

1 OEM: Original Equipment Manufacturer. In this specific context, the car manufacturers like

Ford, BMW, Toyota, Tesla, Volkswagen…

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Close reading of the press releases issued by both Société Générale and ALD on
this matter, we can state that ALD’s majority shareholder is looking to create a
truly global mobility giant, and that it hopes to do so by combining ALD with
LeasePlan – but on the condition that it will not buy back the 20% stocks it has
freed up with its IPO in 2017.

Indeed, one of the main advantages of a merger between ALD and LeasePlan
would be to give the new company the scale and the means to adapt to the rapid
changes in the mobility ecosystem. Another would be to bring simplicity to the
customer, as services, solutions and processes can be aligned and integrated on a
wider scale.

However, there’s also a downside. For the customer, more concentration means
less competition. That could also be bad for innovation in general. At present,
LeasePlan is a pioneer on several fronts, for example in open calculation of closed-
end leasing, and in centrally directed fleet management, especially at international
level. ALD, for its part, is one of the biggest innovators in the industry today,
embracing mobility concepts and subscription-based formulas. It would be a pity
if the distinctly innovative spirit of both companies would be harmed by an
economic rationale that reduces mergers to a cost-cutting operation.

2. Our questions

Partnerships?

Perhaps the most interesting question is about the various international
partnerships of the companies involved. In 2009, ALD Automotive and Wheels Inc
formed an alliance to serve their global customers. Donlen, for its part, has a
partnership with European leasing company Athlon.

Knowing that international customers seek efficiency by consolidating their
suppliers, it will be interesting how the partnership angle of these merger stories
evolves. Because LeasePlan has its own subsidiary in the United States.

So, what will happen, Will Wheels Inc follow Donlen, and switch partnerships from
ALD to Athlon? That would allow ALD to build on LeasePlan USA to expand its
presence in North America. Or will ALD and LeasePlan sell the latter’s highly
successful U.S. subsidiary, for example to Athene Holding? That could pave the
way for ALD-LeasePlan to become a global partner for Donlen-Wheels. Or is there
another option on the table? Fleet customers certainly would like to know.

Consolidation?

Another pressing question: do these two mergers signal the beginning of a larger
consolidation trend in our industry? The two aforementioned constellations
would dwarf many of their competitors. These in turn would be motivated to seek
some scale as well.

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There are some preliminary associations already in place. Alphabet and Athlon
already collaborate on mobility under the Now umbrella. Will they move even
closer? In North America, it will be interesting to see what fleet management
companies like Merchants, Doering or Jim Pattison Lease are going to do.

Further consolidation will bring greater scale, but it will also reduce competition.
That’s the inevitable flipside of the coin.

Strategy?

Our final question: How will these mergers affect the strategies of the companies
involved? Each of them has their own mid- and long-term strategy, with focus
elements like geographic expansion, electrification, mobility, digitisation, and so
on. Quite often, the strategies of the merging companies don’t fit together one on
one. So at least one of them will have to change its strategy – despite earlier
commitments, also by their customers.

3. Fleet managers' first reactions

Mergers are perfectly justifiable from the viewpoint of the companies that are
merging. But are they equally logical and desirable for their customers? That’s
what we wanted to hear from some major international fleet customers.

We spoke to the managers of some of the biggest and most important corporate
fleets in Europe and North America. They were willing to provide some insight
into their thinking, on condition of anonymity.

Mixed feelings

The overall impression: feelings are mixed, with more negatives than positives at
the moment. Of course, the fleet managers acknowledge that there are advantages
of scale to these mergers. Considering that the merging companies have a
complementary geographic spread, up to a degree at least, it is also likely that
these consolidations will improve global coverage, they admit. So, if done right,
these two operations could present a great opportunity for fleets to improve their
supply chain.

The elephant in the room is competition, or rather, the lack of it. The corporate
fleet managers we spoke to all point out the danger of an industry with fewer,
bigger players. “Competition is like an engine that keeps the vehicle running”, said
one. All feared becoming dependent on a handful of fleet suppliers, who could
impose their conditions virtually at will because they had become unavoidable.

Size risks – and opportunities

A second point, especially in the case of the potential ALD-LeasePlan merger, is
the fear that it will leave other players as either too local or too small.

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Plenty of multinationals have centralised their procurement and fleet category
management, allowing for only a limited number of internal and local fleet
resources. Their policy simply doesn’t allow for working with either local
suppliers or a wide range of lease suppliers. What they want is simplicity, and a
limited number of players, in a competitive setup that generates a fair price.

This is a risk for ALD-LeasePlan, and an opportunity for regional players. If they
can offer a consolidated approach for their region, this could lure international
customers their way.

Quality of service

One global fleet manager, one of the most respected voices in the industry today,
worries about the Service Level Agreements, and the quality of service. His
argument: establishing a cooperation or implementing a merger takes time,
demands energy and creates uncertainty, both within the organisations and with
the employees:

“We know what they’ll say: that everything will stay exactly the same for the
customers. But we also work for multinationals, so we know how it goes with
mergers and acquisitions. There is always a loss of energy and focus. So there will
be an impact on the day-to-day quality of service. And with all of today’s
challenges, including the pandemic, the need to electrify and the chip shortage,
this is an added problem we can surely do without.”

Forced to rethink suppliers

A fourth point that emerges from our talks with fleet managers: the looming threat
to supply arrangements. Fleet customers choose their suppliers for a variety of
finely calibrated parameters. Some link to corporate strategy and internal
mandates that require working in a dual or multisupplier scheme.

An eventual merger between ALD and LeasePlan would force many of the most
important fleets to rethink their supplier configuration, as they have dual supply
deals with exactly these two companies. “That is sad, because we have contracts
that cover long periods of time, based on trust, commitment and loyalty”, said one.

The issue goes beyond mere policy, and touches upon strategy. Many fleet
customers have set out a long-term fleet, mobility and sustainability strategy, and
they’ve chosen partners that best fit those strategies. But how much of that ‘fit’
will remain after their preferred partner has merged?

One obvious example is LeasePlan, which has committed itself to reduce its entire
funded fleet to zero emissions by 2030. ALD has a different approach to
sustainability. Which commitments are customers supposed to take seriously?
The same goes for other strategic choices in terms of expansion, digitisation and
smart mobility. Will one strategy be followed and the other discarded, or will there
be a compromise between both?

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Customer first

For suppliers, mergers have many advantages. But for customers, the same
operation raises many questions – pertinent ones. Certainly, both Donlen and
Wheels, and ALD and LeasePlan realise that their most important and most
valuable asset are their customers. If they want to avoid ‘streamlining’ this asset,
they must step up their efforts to communicate clearly and put the customer first.
That is not only what they demand, it’s what they deserve.

Authored by: Steven Schoefs

Source: https://www.globalfleet.com/en/financial-
models/europe/analysis/mergers-wheels-donlen-ald-leaseplan-whats-
next?a=SSC01&t%5B0%5D=ALD&t%5B1%5D=LeasePlan&t%5B2%5D=Donlen
&t%5B3%5D=Wheels&curl=1

November 1st, 2021


EXHIBIT 2: Merger announcement

ALD to Acquire LeasePlan for $5.5 Billion

NewALD will be led by ALD’s Tim Albertsen as CEO

The transaction is expected to close at the end of 2022 and will create a combined
firm, dubbed ‘NewALD’, that will be a leading global player in mobility worldwide
and will “embrace the mobility sector’s global growth megatrends”.

The combined business will be led by ALD CEO Tim Albertsen and will be key in
moving the auto sector from ownership to usership models and zero-emission
vehicles, according to the firms. It will also continue to accelerate towards data-
driven digital transformation of the mobility industry.

Tim Albertsen, CEO of ALD, commented: “In the context of today’s transformation
of the automotive and mobility sectors, which is proceeding at an unprecedented
pace, this proposed transaction is instrumental in the creation of a leading global
player in mobility. By combining the multiple strengths of ALD and LeasePlan,
gaining size, joining forces in digital and creating a leading provider of sustainable
mobility solutions, we would transform our industry and be best positioned to
deliver even better solutions and value propositions to our enlarged client base.”

The merger will draw on the two companies’ complementary capabilities,
spanning the B2B, B2C and B2E2 sectors. The increased size of the new business
is also expected to provide key advantages; from global offering and coverage of
all client categories, to an increased portfolio of products and services, and a
“balanced” geographic coverage.

2 Business-To-Employee

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ALD, which is listed in France and majority-owned by Société Générale, provides
full-service leasing and fleet management services across 43 countries to a client
base of large corporates, SMEs, professionals and private individuals. As of mid-
2021, it managed 1.76 million vehicles.

LeasePlan has approximately 1.8 million vehicles under management in 29
countries under its Car-as-a-Service banner. Its former CarNext online B2C and
B2B used car marketplace was carved out into an independent business in July
2021 after raising €400m (£334m).

At the closing of the proposed acquisition, Société Générale will own around 53%
of NewALD while LeasePlan shareholders will hold 30.75%. Société Générale will
also commit to remaining the long-term majority shareholder going forwards.

The deal will position NewALD for long-term fleet growth of at least 6% p.a. post-
integration. Cost-to-income ratio is being targeted to improve to around 45% by
2025, said to confirm its position as best-in-class in the industry and underpinned
by scale effects and cost synergies. The deal is also expected to provide strong
shareholder returns.

Tex Gunning, CEO of LeasePlan, said: “The combined business would be
instrumental in moving the automotive industry from ownership to subscription
models and zero-emission mobility. By joining forces with ALD, we combine the
best talents in the industry with the investment power needed to meet the next-
generation mobility needs of our customers. From day one, NewALD would be
operating one of the largest fleets of electric vehicles and will continue to set the
standard for ESG in the mobility industry. I am very proud of all LeasePlanners for
bringing our business to where it is today. We are looking forward to working with
the excellent team at ALD and taking our combined business into the exciting
future of mobility.”

ALD and LeasePlan had announced late-October 2021 that they were in talks over
a merger. According to reports earlier in 2021, LeasePlan part-owner TDR Capital
had been considering a sale after buying into LeasePlan in 2015, and was
exploring options for the business after receiving approaches from strategic
investors. A merger with ALD was rumoured then.

The proposed transaction has received the support of Société Générale’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 deal is subject to regulatory approvals.

The transaction excludes LeasePlan Australia and LeasePlan New Zealand, which
were sold to SG Fleet, effective 1 September 2021.

Source: https://www.fleetmanagementweekly.com/ald-to-acquire-leaseplan-
for-e4-9-billion/

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Consulted on January 10th, 2022.


EXHIBIT 3: LeasePlan Profile

Merger ALD-LeasePlan: LeasePlan, when orange becomes green

The merger of LeasePlan and ALD Automotive would make huge waves in the fleet
and lease world, both in Europe and beyond. How did the Dutch leasing and
vehicle management provider become such a valuable – and valued – global
player? A potted history.

With revenue close to €10 billion in 2020, a global fleet of about 1.8 million
vehicles and a presence in 32 markets worldwide, LeasePlan is one of the world’s
largest and most influential leasing and fleet management companies. It’s a
journey that started barely six decades ago in the Netherlands, and that’s far from
over yet.

Open calculation

LeasePlan was founded in 1963 as a joint venture between a bank and a company
providing professional services for drivers. LeasePlan was one of the first
companies to offer leases on vehicles in the Netherlands. Company founder and
long-time CEO Anton Goudsmit and Huib van der Meulen, another LeasePlan
pioneer, together developed ‘open calculation’, a concept based on transparency
combined with advantageous financing.

In the 1970s, LeasePlan expanded into the neighbouring countries: Belgium,
Germany, France, and the UK. In 1983, the company went intercontinental,
opening up in the United States.

In 1985, Dutch bank ABN AMRO acquired the company, managed under the ABN
AMRO Lease Holding. LeasePlan started diversifying, among others by offering
online fleet management software. The company continued to expand, setting up
shop in Australia in 1988.

Acquisition spree

In the early 2000s, LeasePlan went on an acquisition spree, adding fleet
management companies such as Dial (UK, France, Italy) and CSC (US). Parent
company ABN AMRO also merged its own leasing subsidiaries, Auto Lease Holland
and Leaseconcept, with the LeasePlan Netherlands branch. In 2003, ABN AMRO
Lease Holding was renamed LeasePlan Corporation.

In 2004, ABN AMRO sold LeasePlan Corporation for €2 billion to a consortium led
by Volkswagen (50%), with minority stakes of 25% each for Olayan Group (Saudi
Arabia) and Mubadale Development Company (UAE). In 2009, German banker
Friedrich von Metzler acquired the two minority participations to become 50/50

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shareholder in LeasePlan. For this purpose, his Fleet Investments BV created a
joint venture with Volkswagen AG called Global Mobility Holding BV.

In 2015, Global Mobility Holding BV sold LeasePlan to its now-previous owners,
LP Group BV, for €3.7 billion. LP Group B.V. is a consortium of long-term investors
consisting of

- two pension funds: Stichting Pensioenfonds (formerly PGGM) from the
Netherlands; Arbejdsmarkedets Tillægspension (ATP) from Denmark;
- two sovereign wealth funds: GIC Private Limited from Singapore; the Abu
Dhabi Investment Authority (ADIA) from the UAE;
- and one private equity firm: TDR Capital, based in London – the lead
shareholder in the consortium.

IPO aborted

In October 2018, LeasePlan announced an IPO. The plan was to list its shares on
the Euronext exchanges in Amsterdam and Brussels. The aim was to appeal to
both retail and institutional investors in the Netherlands and Belgium. The
targeted valuation was around €7.5 billion. However, a week after the
announcement, the IPO was aborted – investor confidence at that time did not
prove as high as had been hoped.

In April 2021, it was reported that both major lease company ALD and Spanish
banking giant Banco Santander were both interested – separately – in acquiring
LeasePlan. At that time, none of the parties wished to confirm or deny the report.

Over the years, LeasePlan has not only grown to become one of the largest fleet
management companies in the world – and by some metrics the largest. It has also
made some strategic choices that, through the sheer size of the company itself,
have an impact on the leasing and mobility markets where it operates.

Remarketing

In 2017, LeasePlan set up CarNext.com as a digital remarketing platform – not just
LeasePlan’s own ex-lease vehicles, but also for high-quality vehicles from third
parties. Pan-European and online-first, CarNext.com allows private customers to
source used vehicles to buy, finance or subscribe to. For professional buyers,
there’s an online auction platform.

Until July 2021 LeasePlan positioned CarNext.com as its ‘other’ pillar, next to
traditional leasing products (rebranded as ‘Cars-as-a-Service’). But at the start of
the summer period CarNext raised €400 million to accelerate growth and was
carved out from LeasePlan into a fully independent business, owned by a
consortium of investors including TDR Capital (a subsidiary of the Abu Dhabi
Investment Authority), GIC, PGGM, ATP, and Goldman Sachs Asset Management.

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Sustainability

LeasePlan is a trendsetter rather than a bystander when it comes to the transition
to sustainable energy. That’s why the company has committed itself to achieving
net-zero emissions from its funded fleet by 2030. Its own employee vehicles target
complete transition to BEVs already by the end of this year.

Now how will the merger with ALD impact that strategy? Would this sustainability
target be translated to the ALD fleet as well, or could the merger be an interruption
and obstacle in achieving the planned net-zero emissions?

Digitalisation

LeasePlan is in the process of fully digitising the entire customer experience. This
will enable it to benefit fully from the chances offered by innovation. For the
advent of Big Data in automotive is opening up interesting avenues towards not
only cost optimisation, but also new and improved products and services.

Over the past few year’s What’s Next has been LeasePlan’s tagline for many of its
strategic decisions, such as the ones listed above. In light of LeasePlan’s possible
new ownership structure, industry watchers – and especially fleet customers – are
now asking that same question, with added emphasis.


Authored by: Frank Jacobs

Source: https://www.fleeteurope.com/en/leasing-and-
rental/global/features/merger-ald-leaseplan-leaseplan-when-orange-becomes-
green?a=FJA05&t%5B0%5D=LeasePlan&curl=1

Date: January 6th, 2022


EXHIBIT 4: ALD Profile

Merger ALD-LeasePlan: ALD, the banker’s daughter who got married

The ideal banker is prudent, going on boring. The typical banker’s daughter wants
a bit more excitement from life. That would explain ALD Automotive’s
wholehearted embrace of the startup mentality, and its zeal for innovation. The
merger with LeasePlan would yet be another radical move for the SocGen
subsidiary.

The Société Générale – SocGen for short – is one of the crown jewels of France’s
economy. With a history going back to 1864, it is one of the "trois vielles", the three
grand old banks of France (together with BNP Paribas and Crédit Lyonnais). Just
one example of its historical importance: the bank helped finance the Eiffel Tower.
But it remains as vital today is it is venerable.

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Seizing opportunity

In 2001, SocGen sensed that the fleet industry was going through a period of
concentration and seized the opportunity to acquire ALD, the fleet management
subsidiary of Deutsche Bank. It merged ALD with its own fleet daughter Temsys
to form ALD Automotive.

The new company, present in eight European markets and market leader in
Germany, tailored its leasing offers primarily to the needs of large corporate fleets.
Over the past 20 years, robust growth – both organic and through acquisitions –
and smart decisions have elevated ALD into the small club of world-leading fleet
management and vehicle leasing providers.

Today, the France-based fleet and mobility supplier manages a global fleet of
around 1.8 million vehicles in total and is present in 43 countries around the world
– in 27 of which it holds a Top 3 market position. By its number of contracts (and
excluding OEM captive lessors), ALD is ranked third worldwide and first in
Europe.

First major IPO

In June 2017, ALD launched an IPO, the first major European leasing company to
do so. The IPO, on Euronext in Paris, garnered about €1.16 billion for just over
20% of the total stock, meaning the entire company was market-valued at €5.78
billion. Société Générale retains 80% of the shares.

With a nimbleness belying its size, ALD has moved itself to the forefront of several
trends transforming mobility worldwide, not least in terms of electrification. In
2020, under its new CEO Tim Albertsen, the company launched a strategic plan
called Move 2025.

Its aim is to leverage ALD’s leading positions in leasing, digitalisation, and
electrification to become a leader in fully-integrated, sustainable mobility. The
plan rests on four pillars and targets four key deliverables.

Four pillars

• Move for Customers. ALD aims to offer best-in-class, customised products
and services, focusing on the digital customer experience.
• Move for Growth. ALD is ready to capture growth, wherever it presents
itself – both geographically (e.g. Latin America, Asia) and in terms of
business segments (e.g. SMEs, private lease, sustainability).
• Move for Good. ALD wants to provide sustainable products and services,
be a responsible employer and reduce its own environmental footprint.
• Move for Performance. ALD wants to use data and digitalisation to further
improve its efficiency.

Four key deliverables

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 • Leasing and fleet management. ALD wants to invest in consultancy for large
corporates, LCV-driven services for SMEs, new- and used-car lease offers
for consumers, and specific offers for employees.
• Remarketing. ALD is preparing for multi-cycle and multi-channel
remarketing, which will become common when EVs have overtaken ICEs.
• Digital investment. Increased spending across all four pillars will focus on
connectivity.
• Electric mobility. By 2025, ALD expects 30% of its new car deliveries to be
EVs. That figure will rise to 50% by 2030. It’s a substantial difference with
LeasePlan, which has committed itself to having a 100% net-zero-emission
funded fleet by 2030.

Future-facing products

Within the Move 2025 framework, ALD is stepping up the implementation of its
future-facing products and services. ALD Flex aims to respond to greater market
demand for flexible leasing solutions, and ALD Electric is an offer designed to
mainstream EVs in the very near future. Already today, 24% of ALD’s fleet is low-
or zero-emission – making it very likely that it will hit the 30% target well before
2030.

By 2025, ALD wants to have 30% low- and zero-emission vehicles in its fleet – a
target that it may reach a lot sooner, since the figure is already at 24% today. The
company also sees private lease and eLCVs in particular as important areas of
future growth. And traditionally, ALD has operated a large part of its fleet via
partnerships – presently about 30% of the total.

Partnering USP

As one of its USPs, ‘partnering’ will remain a focus for the company in the near
future; not just with banks and insurers, but also with OEMs, start-ups, new-
mobility providers, and other disruptors. ALD has leasing arrangements in place
with EV manufacturers such as Tesla, Polestar, and Lynk & Co., for example. Only
recently did it acquire subscription specialist Fleetpool in Germany.

By 2025, ALD aims to be present in 50 markets, half a dozen more than the current
tally – with a special interest in developing opportunities in South East Asia.

It’s easy to see how some of ALD’s strategic targets will be boosted by the
acquisition of LeasePlan. At the same time, managing and digesting a corporate
takeover of this magnitude will consume a serious amount of time and effort,
which may put some goals on the back burner and have a serious impact on
service quality.

And then there is the recent merger of its North American partner Wheels Inc.
with Donlen. Will ALD continue with the new Donlen-Wheels configuration in
North America or will it rely on the activities of LeasePlan over there?

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So, ALD will need to make some important choices in the near future. Two voices
will be whispering in Tim Albertsen’s ear: one of a prudent banker, the other of a
creative banker’s daughter. Will one win, or will both compromise?

Authored by: Frank Jacobs

Source: https://www.globalfleet.com/en/leasing-and-
rental/global/features/merger-ald-leaseplan-ald-bankers-daughter-who-got-
married?a=FJA05&t%5B0%5D=ALD&t%5B1%5D=Société%20Générale&curl=1

Date: January 6th, 2022


EXHIBIT 5: Merger Announcement

ALD acquires LeasePlan for €4.9 billion – “NewALD” is born

So it’s finally happening: ALD announced it will acquire 100% of LeasePlan. Price
of the merger: €4.9 billion. Société Générale will own ca. 53% of the merged
company, provisionally called “NewALD”, LeasePlan shareholders a total of
30.75%. The merged entity forecasts 6% fleet growth per year.

The news is not exactly a surprise. As we reported in October last year, both
companies revealed they were in talks about some sort of takeover of LeasePlan
by ALD. That doesn’t lessen the major impact of the deal, now it’s finally been
clinched. Considering the prominence of both companies, the merger will most
likely lead to a major realignment of the fleet and mobility industry, in Europe and
beyond.

What we know

So, what’s in the deal? Here’s what we know so far.

• ALD has signed a Memorandum of Understanding to acquire 100% of
LeasePlan from the consortium that owns LeasePlan, which is led by TDR
Capital.
• The acquisition, which is expected to close by the end of 2022, will cost
€4.9 billion and will be achieved via a combination of cash and shares.
• LeasePlan shareholders will hold 30.75% of the merged company. ALD’s
parent company Société Générale will have around 53% and commits to
remaining the majority shareholder for the long term.
• The provisional name for the merged entity: “NewALD”.
• “NewALD” will have a combined fleet of about 3.5 million vehicles
worldwide. By its sheer size, it will be a leading mobility player on the
global scale, create massive synergies and economies of scale, and generate
significant value for shareholders.

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Growth, improvement, synergies

In a press release, the parties to the proposed deal – approved by the Boards of
Société Générale, ALD and LeasePlan but pending approval by the relevant
authorities – call the merger “transformative” for their companies:

• They predict “NewALD” will be positioned for long-term fleet growth of at
least 6% per year, following the integration of ALD and LeasePlan.
• “NewALD” would also target an improvement in cost to income ratio to ca.
45% by 2025, confirming its best-in-class position in the industry.
• The transaction is expected to generate operational and procurement
synergies of around €380 million per year, before tax.
• Considering the benefits of fully-phased synergies, and excluding
restructuring costs, the pro-forma accretion of normalised earnings per
share could be c. 20% in 2023.

"New chapter"

(…)

“This deal was strategically necessary”, said Mr Gunning (CEO LeasePlan) in a
follow-up conversation with Dutch trade journal Automotive Management, citing
ongoing megatrends such as ownership-to-usership, carsharing and subscription.
The merger offers the advantages of scale and access to funding that are necessary
to develop the digital tools that offer the seamless experience customers want,
according to Mr Gunning.

Last but not least, the merger also strengthens the lessors’ position vis-à-vis the
OEMs, Gunning says: “The OEMs increasingly want to deal directly with their end
customers, both corporate and private. That makes them our competitors – as
they readily admit. However, especially corporate clients prefer to deal with multi-
brand suppliers, which they see as a plus.”


"Third pillar"

Using figures from June 2021, LeasePlan and ALD (soon “NewALD”) jointly have
3.5 million vehicles in portfolio. That puts them behind only Volkswagen Financial
Services (11.3 million) and RCI Bank & Services (3.8 million), and ahead of Toyota
Financial Services (3.2 million), Arval (1.4 million), Element (1 million) and
Alphabet (0.7 million).

In a digital press conference, Frédéric Oudéa and Diony Lebot, CEO and Deputy
CEO of Société Générale, joined Tim Albertsen to offer a preliminary sketch of the
deal, and what it will mean to all involved.

The deal should be closed by the end of the year, and in the first phase thereafter,
the aim is to tactically integrate the new company’s 12 major markets – i.e. by mid-

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2024 (the company/companies are not yet saying which those 12 markets will
be). It is expected that the management teams will stay in place until integration
is achieved; and that “NewALD” will be led by Tim Albertsen.

One of the obvious questions pertains to the different electrification goals of both
companies. By 2030, ALD wants to have 50% of its new deliveries to be electrified.
LeasePlan is aiming for full electrification by then. The compromise, for now,
seems to be that each entity maintains its own ambitions. From 2025, digital and
operational processes should be in place to allow for integrated management.

Remarkably, Mr Oudéa said it was Société Générale’s intention to turn its new,
expanded fleet and mobility subsidiary into a full-blown third pillar, “next to retail
banking and investment banking”, and this because of the great potential of the
rapidly emerging new paradigm of mobility – sustainable, shared, connected.


Authored by: Frank Jacobs

Source: https://www.globalfleet.com/en/financial-
models/europe/features/ald-acquires-leaseplan-eu49-billion-newald-
born?a=FJA05&t%5B0%5D=ALD&t%5B1%5D=LeasePlan&t%5B2%5D=Société
%20Générale&curl=1

Date: January 6th, 2022


EXHIBIT 6: Industry expert view 1

“NewALD is the last of the great traditional lease mergers”

Philippe Bismut, until end 2018 CEO of Arval, remains an astute observer of the
lease and mobility industry, whose opinions and insights remain highly valued.
Here are his takeaways from the acquisition of LeasePlan by ALD, and the
imminent emergence of a “New ALD”.

The deal was priced at €4.9 billion. With your own experience of previous
deals (Arval acquired GE’s European business in 2015, Ed.), does that sound
too much, too little, or just about right?

“I’m not privy to the specifics of this deal, but if you consider that this transaction
was made between two companies that had no urgency to reach a deal – in other
words, neither had to make this deal – one can only conclude that the deal must be
good for both parties. The fact that the sum is expressed partly in cash and partly in
shares strengthens that impression.”

“There really isn’t any comparison possible with Arval’s acquisition of part of GE.
That was a ‘fire sale’ – GE actively wanted to get rid of its business, so we were able
to snap it up at a very good price, for us at least.”

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“To check how equitable this deal is, just divide ALD’s market valuation (app. €5.28
bn, Ed.) by its number of vehicles. Using that yardstick, you’ll see that this deal is very
balanced.”

ALD and LeasePlan are big players. In some countries, their joint market
share is up to 60-70%. That won’t pass muster with the so-called 'relevant
authorities'. How will that influence the deal?

“This is typical for mergers of a certain size – there will always be some markets
where the combined presence translates into a ‘dominant position’. And the answer
is always the same: for the merger to go ahead, the companies must accept that they
will have to dispose of some assets.”

“However, erosion by merger is not just a market-by-market phenomenon. You also
have to look at it from the client perspective. While some are happy in a sole-supplier
relationship, others insist on having multiple suppliers. If the merger between ALD
and LeasePlan puts them – against their will – in a sole-supplier relationship, they
will actively seek out alternatives.”

“I’m sure ALD and LeasePlan are factoring in these losses, and will counteract by
offering discounts and other special deals. Nevertheless, it’s an interesting
opportunity for their competitors to snap up some of those losses. And it will mainly
be other multinational lease companies rather than local players that benefit, since
that is the type of supplier the customers sought out in the first place.”

Talking about those other lease companies: How do you think they’re
reacting to this merger?

“I think that for now, they’re fairly relaxed. No doubt ‘NewALD’ will eventually
emerge as a very strong player. It has all the ingredients to do so: the international
coverage, the advantages of scale, the access to funding. In the long run, that will of
course make a difference. But in the short run, as the two companies go through the
restructuring required to become one, there will be some turbulence – say, two to
three years. So other lessors won’t immediately be worried.”

“A word on those advantages of scale. ‘NewALD’ itself speaks of a recurring
advantage of €380 million. Considering the combined fleet of 3.5 million, that works
out to a total minus of – roughly - €100 per vehicle per year. While that is a nice
bonus, it’s likely ‘NewALD’ will keep most of that as profit, meaning the customer will
only notice a price advantage of a few euros per month. And while that may sway
some of the more price-conscious of fleet customers, it won’t make a difference for
most – also because price is not the only component of any procurement decision.”

Do you think other lease companies are now assessing their own options for
mergers?

“While this is a large merger, mergers in the fleet and mobility space are nothing
new. As long as I remember, small players have been acquired by medium-sized ones,
and medium-sized players by big ones. The question is: if you look at the current Top

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10 of lease companies, is there any room for additional mergers? Perhaps. But the
market alone doesn’t decide this. It’s also a question of shareholder agreement.”

“In my opinion, rather than looking for mergers, the industry will be looking for
partners. Alliances with players from different sectors are more interesting, because
they bring together the different skills, which in combination may be just what this
fast-changing industry needs. For example, if a rental player like Europcar teamed
up with an OEM like Volkswagen. Or perhaps a vertical integration, from lease
companies down to the vehicle retail specialists. I think those kinds of combinations,
those new types of alliances, are going to be the new trend.”

If that’s true, then the marriage of ALD and LeasePlan is a very old-fashioned
merger.

“Don’t get me wrong: this is a good opportunity to increase value. A growth
perspective of 6% per year is an excellent story, from the perspective of the
shareholders. However, it doesn’t resolve any of the big questions about the future of
mobility. It’s two big lease companies, who will soon be an even bigger lease
company.”

“That in itself will create some changes in the market. For instance, it will be
interesting to see whether the emergence of ‘NewALD’ will change the relationship
with the OEMs. At present, it is one of, as we say in French: Je t’aime, moi non plus.
(i.e. a love-hate relationship, Ed.) Perhaps the merger will prompt them to take
proactive steps on the rental market.”

“But yes, this is a rather old-school deal. I would say, the last of the great traditional
lease mergers. But don’t use that – because if you do, I’ll bet you next week Arval will
be shacking up with Athlon, or something like that (laughs).”

No, of course we won’t!

Author: Frank Jacobs

https://www.globalfleet.com/en/financial-models/europe/features/newald-
last-great-traditional-lease-
mergers?a=FJA05&t%5B0%5D=ALD&t%5B1%5D=LeasePlan&t%5B2%5D=New
ALD&curl=1

January 6th, 2022


EXHIBIT 7: Industry expert views 2 and 3

“Of course, I would have preferred to see LeasePlan acquire ALD!

Both Michel Van den Broeck and Nick Salkeld spent decades of their professional
lives at LeasePlan. For them, the sale of the company is not just business, it’s also
a bit personal. Even though neither was surprised by the deal, there is also a sense

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that it could have gone differently. In either case – both Michel and Nick remain
proud of their time at LeasePlan, and of the company’s stellar achievements.

Michel Van den Broeck spent a quarter century with LeasePlan as managing
director and as senior vice-president, and he was the first President of LeasePlan
International. In 2016, Mr Van den Broeck retired from the company, to
concentrate on independent board memberships.

Were you surprised by the sale of LeasePlan?

“Not really. For months in advance, we knew this was going to happen. It’s good to
have certainty now, although it will be interesting to see how this deal will get the
necessary authorisations. Much will depend on how they will define their business.”

How do you mean?

“If you’re looking at full operational leasing, the combined market share of ALD and
LeasePlan is dominant. But when you look at the wider context of leasing, or even if
you just also take financial leasing and bank leases into consideration, they are much
less dominant. So, the ease of approval by the relevant authorities will depend at
least in part on the way ‘NewALD’ frames its leasing activity.”

Do you think this is a good deal for LeasePlan?

“Right now, I think the deal is the best that could have happened to LeasePlan.
Personally, though, I would have liked that it had been LeasePlan who acquired ALD!
However, that became impossible after the sale of LeasePlan in the early 2000s to a
consortium led by Volkswagen: ever since, the shareholder environment has been
unstable.”

“As a result, a long-term vision at shareholder level was never developed. That also
led to questions about the company’s effective independence. That situation has not
changed with LeasePlan’s current lead shareholders, TDR Capital. When a private
equity company like that enters the board, you know they’re already thinking about
the exit.”

After the takeover by TDR Capital, LeasePlan experienced something of a
brain drain, with a lot of executives and managers leaving the company. Was
that the beginning of an inevitable process leading to the end of the
company?

“That may be putting it a bit too strong. Personnel changes are normal, especially
when a company enters new ownership. Honestly, the ‘old dinosaurs’ wouldn’t have
been able to make the necessary changes and achieve the strong degree of
operational centralisation that the new management has managed to achieve. Of
course, this happened fast – too fast for some, without a lot of emotion or tact. But
that’s business.”

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Looking back at your own time at LeasePlan, what does the company
represent for you?

“LeasePlan stands for proximity to the customer. We were the first lease company to
successfully expand internationally. We did this not by entering a lot of partnerships,
but rather by acquisitions and greenfield developments. Thanks to our pioneering
spirit, we achieved continuous growth over many years.”

“And that makes me proud. Knowing that I contributed to building an organisation
that has an excellent performance record of 60 years, both externally towards its
customers, and internally towards its employees.”

What do you think ‘NewALD’ should definitely keep from LeasePlan’s history
and character?

“The willingness to excel and the aim to always serve the customer.”

So, not LeasePlan’s famous corporate colour, orange?

“Oh no. I’m not emotional about that. In my time, I’ve seen the LeasePlan logo change
three times. And by the way, in a B2B environment, the brand label is less important
anyway than in a strictly retail environment. More important is that for
approximately 60 years, the company has operated under the same name!”

Nick Salkeld started out as Commercial Director of LeasePlan UK in 1998, rose to
become Managing Director of LeasePlan International and then Regional Senior
Vice-President. Mr. Salkeld ended his long involvement with the company as Chief
Commercial Officer in 2017. He is now Chief Operating Officer at MHC Mobility
Europe.

Were you surprised by the sale of LeasePlan?

“No. In March, we heard ALD and LeasePlan were interested in each other. In
October, they confirmed that they were in talks. And now the deal is announced, it’s
finally a fact. But as I said, we knew this might happen.”

In your time at LeasePlan, could you have imagined the company being
bought by a competitor?

“When you work for a big multinational company, you always know that this might
happen. In my period with LeasePlan, I’ve been through two acquisitions, first by
Global Mobility Holding in 2004, then by LP Group in 2015. So, a sale of LeasePlan is
in itself nothing new. What is new, however, is that the brand name may disappear.”

Was this the right time for the deal?

“What is the right time? By definition, when a buyer and seller find each other, it’s
always the right time. After a turbulent couple of years, with uncertainty due to the
pandemic, we have seen that all market players have had a good 2021. They were

21
able to recover well, thanks in large part to excellent used-car market figures. In this
context, it was the right time for the two shareholders to reach an agreement.”

And is it the right price?

“Once again, if the shareholders are happy about the price, then it’s the right price.
It’s not up to me to comment on the finance details of this deal.”

Looking back at your own time at LeasePlan, what does the company
represent for you?

“An innovative spirit, and talented people. Innovation has been a key driver for
LeasePlan’s success. Think about the open calculation model, which was
revolutionary at the time and is now used by others as well. And with that innovation
came the talent, the quality of people to deliver good levels of service.”

“For me, the most memorable period at LeasePlan was during and after the global
credit crisis of 2007 and 2008: seeing how our people in our various markets
responded to that crisis, working together, and coming up with new ideas that kept
LeasePlan successful and on the growth path. Still today, the power of LeasePlan
rests on the talent of its people in its various markets.”

What do you think ‘NewALD’ should definitely keep from LeasePlan’s history
and character?

“The spirit of the company, the reason why they bought LeasePlan. And that’s not
just the size or the services. It’s the quality of its people, who deliver LeasePlan’s
services with an innovative spirit.”


Authored by: Steven Schoefs

Source: https://www.fleeteurope.com/en/financial-
models/europe/interviews/course-i-would-have-preferred-see-leaseplan-
acquire-
ald?a=SSC01&t%5B0%5D=LeasePlan&t%5B1%5D=ALD&t%5B2%5D=NewALD
&t%5B3%5D=MHC%20Mobility&curl=1#.Yd2nKpcaxvQ.linkedin

January 11th, 2022

END OF CASE MATERIALS

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