SocGen’s ALD Is Said to Progress in Talks on LeasePlan Deal

Societe Generale SA’s car leasing arm ALD SA is progressing in negotiations on a potential combination with competitor LeasePlan, people with knowledge of the matter said.

ALD is in bilateral talks with LeasePlan’s owners, an investor group led by buyout firm TDR Capital, about a deal, the people said. The French company has been conducting due diligence on LeasePlan’s business, according to the people, who asked not to be identified because the information is private.

LeasePlan’s private equity backers are considering options for the business ranging from a full to partial sale, Bloomberg News reported in March. Spanish lender Banco Santander SA was also evaluating LeasePlan earlier, people with knowledge of the matter have said.

A merger between LeasePlan and ALD, which manages nearly 1.8 million vehicles across 43 countries, could create a European vehicle leasing powerhouse. For Societe Generale, it would represent one of the French bank’s biggest bets in auto leasing since it began expanding into the market in the early 2000s.

Shares of ALD have risen 10% in Paris trading this year, giving the company a market value of about 5.1 billion euros ($6.2 billion). While the TDR consortium is currently focusing on discussions with ALD, other suitors could still emerge, the people said.

No final agreements have been reached, and talks could still fall apart, the people said. Representatives for ALD, Societe Generale and TDR declined to comment. A spokesperson for LeasePlan didn’t immediately respond to a request for comment.

LeasePlan offers personal car leases and oversees corporate fleets. It manages about 1.7 million vehicles in more than 30 countries, according to its website. It reported about 9.85 billion euros of revenue last year, competing with the likes of ALD and BNP Paribas SA’s Arval unit.

Leasing businesses can be highly profitable for lenders, with the potential to deliver better returns on equity than banking and trading units. Societe Generale has grown ALD in part through acquisitions and took the business public in 2017. The French lender owns about 80% of ALD, according to data compiled by Bloomberg.

A consortium including TDR, Abu Dhabi Investment Authority and an arm of Goldman Sachs Group Inc. agreed to buy LeasePlan for 3.7 billion euros in 2015. LeasePlan’s shareholders were seeking a valuation of around 7.5 billion euros from an aborted initial public offering in 2018.

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