Pitch Best Deal 2020: Boels Rental – Cramo
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Name of the deal: Boels rental acquires Cramo
Date: Announced 11 November 2019, closed on 31 January 2020
Published value: €1.045 billion
Buyer(s): Boels Rental
Target: Cramo
Seller: Cramo shareholders
M&A Database: View more details of this deal
Involved firms and advisors sell side:
Rothschild & Co (M&A Advisory), Duynstee Advisory (M&A Advisory), PwC (Consultancy, Financial Due Diligence), De Brauw Blackstone Westbroek (Legal Advisory Corporate M&A), Hill+Knowlton Strategies (PR Consultancy), Nordea, Roschier (Legal Advisory Corporate M&A)
Involved firms and advisors target:
BNP Paribas (M&A Advisory), Krogerus (Legal Advisory Corporate M&A), KANTER
Pitch
Brief description deal / Deal outline:
Founded in 1977, Boels is one of the most renowned rental companies in Europe, with revenue of €578m and EBITDA of €202m in 2018, having approximately doubled its turnover every five years since its foundation. Under the day-to-day management of major shareholder and current CEO Pierre Boels, the Group has undergone significant expansion through a combination of opening new branches and a series of successful acquisitions, growing from 20 branches across 3 countries in 1996 to a network of over 415 depots across its General and Specialist rental divisions and a network of over 2,700 Do-It-Yourself (“DIY”) shop-in-shop stores across 11 countries today. Through its network the Group’s 4,200 employees manage and rent out a fleet of approximately 7,600 pieces of equipment (including machines, tools, units catering and event equipment) to a well-diversified customer base across the construction, industrial, public works, services and events sectors.
Cramo is one of the leading European equipment rental services companies with revenue of €632m in 2018, serving approximately 150,000 customers through around 300 depots across 11 markets with a full range of machinery, equipment and related
services. Cramo enjoys solid market positions in all key markets and has a strong focus on the most sophisticated customers primarily within the renovation and new-build construction, industrial and public sector end-markets. Boels and Cramo have reached an agreement on a recommended offer of €13.75 (cum dividend) in cash per Cramo share (the“Offer Price”) valuing Cramo’s issued and outstanding shares at 614.4m, which equates to an Enterprise Value of €1,045.2m.
Following heavy negotiations with Cramo’s non-tendered shareholder base, the agreed recommended offer of €13.75 per share follows Boels initial recommended offer of €13.25 per share, which did not meet the 90% acceptance threshold.
The increased offer price represents a premium of 36.1% to the undisturbed Cramo closing price of €10.10 on 4 November 2019, a premium of 58.5% to the 3-month Value-weighted average price (“VWAP”) and a multiple of 5.1x 2019E post-IFRS 16 broker consensus EBITDA.
The combination between Boels and Cramo will create the #2 player in the European equipment rental market with annual revenues of c.€1,250m and one of the largest depot networks in Europe (more than 750 depots).
The enlarged group will have a strong and resilient geographic profile by combining Cramo’s Scandinavian and Central European business with Boels’ existing platform in the Benelux, UK and DACH region. The combined group will be in a position to further strengthen its prospects within the highly fragmented European market; Cramo
will become the Scandinavian platform for the enlarged group, and Boels envisages to continue its growth and strengthen its positions and to further develop its footprint in Europe, while capitalizing on the benefits and extended financial and operational leverage of an enlarged group.
The Company financed the transaction and simultaneously refinanced its existing debt facilities with a new underwritten EUR 1.8bn senior loan financing package.
Why should this deal win the Award for Best Deal 2020?
The transaction represents the first TLB syndication completed by a first-time issuer and also the largest TLB to clear the market in Europe since the onset of COVID-19
This landmark transaction will create a Pan-European leader in the rental equipment industry with combined revenues of approximately €1,250m and one of the largest depot networks in Europe (over 750 depots). The enlarged group would create the
opportunity to serve customers better, optimize fleets and retain and attract more talented staff. The enlarged group would be well diversified in terms of customers, business and geographic mix. The combination of Cramo’s Scandinavian and Central European business with Boels’ existing network in the Benelux, UK and DACH region (Germany, Austria and Switzerland) would create a true pan-European equipment rental player with increased scale and resilience. The combined business would be well positioned to grow its markets by leveraging this scale and footprint. The combination of Boels and Cramo has the opportunity to integrate operations in Central Europe and capitalize on mutual best practices in terms of fleet range, logistics and customer service levels.
Deal rationale:
This landmark transaction will create a Pan-European leader in the rental equipment industry with combined revenues of approximately €1,250m and one of the largest depot networks in Europe (over 750 depots). The enlarged group would create the
opportunity to serve customers better, optimize fleets and retain and attract more talented staff. The enlarged group would be well diversified in terms of customers, business and geographic mix. The combination of Cramo’s Scandinavian and Central European business with Boels’ existing network in the Benelux, UK and DACH region (Germany, Austria and Switzerland) would create a true pan-European equipment rental player with increased scale and resilience. The combined business would be well positioned to grow its markets by leveraging this scale and footprint. The combination of Boels and Cramo has the opportunity to integrate operations in Central Europe and capitalize on mutual best practices in terms of fleet range, logistics and customer service levels.
What is the impact of this deal for the company?
The strong strategic rationale will deliver the company several operational synergies, including significant cross-selling and sales channel synergies in Germany and Central and Eastern Europe, opportunities to integrate and recalibrate depots in Germany and
Central and Eastern Europe and realising capex synergies from optimisation of fleet investments across the wider portfolio. The new group is now in a position to further strengthen its prospects within the highly fragmented European market for equipment rental. The company after the acquisition is active in 17 countries, with a top-3 market position in 12 of those countries.
What is the impact of this deal for the direct stakeholders?
The completion of the tender offer did not have any immediate material effects on Cramo’s operations, assets, the position of Cramo’s management, employees or its business locations.
What is the impact of this deal on society?
By leveraging the newly rationalised depots, economies of scale and optimisation of fleet investments, businesses and individuals alike will profit from renting state-of-the-art machinery for competitive prices, resulting in lower overall construction and
production costs, ultimately benefiting end-customers.
What was most complex about this deal?
The public nature of the transaction and composition of Cramo’s shareholder base provided the following complexities:
- Necessity to prevent leakage of intention and offer price;
- Due to presence of blockholders, heavy negotiations around receiving irrevocable undertakings from these large shareholders to tender their shares under the offer price;
- Marketing of the offer to Cramo’s substantial, passive retail investor base in quest of reaching the 90% threshold of tendered outstanding shares to initiate the squeeze-out procedure;
- Large proportion of passive index funds and asset managers in Cramo’s shareholder base provided very little room for error in reaching the 90% threshold;
- Producing a wide range of valuation, price increase, tenderer and financing analyses and documents in a short time frame in order to reach the 90% acceptance threshold in the extended offer period, after the 90% threshold was not met in the initial offer period;
- Daily monitoring of share price and volume developments and regular provision of announcements to the Finnish regulator, often on short-term notice;
- The syndication of Boels' senior loan financing package became increasingly complex in light of the sudden closure of the European debt financing markets following the outbreak of COVID-19. Eventually, the deal managed to gather significant momentum during the second syndication process which enabled the bookrunners to reduce the size of the TLA tranche and tighten the TLB OID from revised guidance.
