SocGen’s car leasing unit ALD to buy LeasePlan for 4.9 billion euros

Societe Generale’s car leasing division ALD has agreed to buy rival LeasePlan for 4.9 billion euros ($5.5 billion) to give it more scale as the rental market moves towards electric vehicles, the French bank said on Thursday.

SocGen said the deal would result in a new, enlarged company with a combined fleet of about 3.5 million vehicles, in which it would hold a 53% stake, and would boost its own net earnings per share by more than 5% from 2024.

The deal comes four-and-a-half years after SocGen floated a stake in ALD at 14.30 euros a share, a level below which the stock has largely traded since, and also after the bank raised cash from selling assets such as asset management arm Lyxor

Shares in ALD climbed 7% in early trading while SocGen shares were 0.8% higher.

“The combination of ALD and LeasePlan makes strategic sense in our view and will grow SocGen’s mix towards a business with good and recurring revenue growth and a high profitability,” wrote brokerage Jefferies, which kept a ‘buy’ rating on SocGen.

Societe Generale (PA:SOGN) Chief Executive Frederic Oudea is in the midst of a broader strategy revamp at the bank, which he started in 2018 and hopes can shore up his legacy before his mandate expires in 2023.

SocGen’s share price is still well below where it was when Oudea took over, although it has rallied around 90% in the past year as it rebounded from trading losses at the start of the coronavirus pandemic.

“This proposed transaction is a major step for ALD and for the Societe Generale group. Over the past 10 years, thanks to long-term vision and rigorous execution, we have positioned ALD to take advantage of the tremendous growth potential in the sustainable mobility market,” Oudea said.

SocGen said the LeasePlan takeover would result in a net earnings per share accretion of more than 20% for the new company formed by the deal in 2023.

($1 = 0.8846 euros)