Fraikin / LEX Transfleet Deal Largest for a Decade

05 December 2005

Release date: 28 November 2005

Fraikin Truck Hire has announced today that it is taking over the Commercial Fleet Division of Lex Transfleet for an undisclosed sum, in what is believed to be the largest corporate deal in the UK commercial vehicle hire sector for a decade.

Fraikin has been in the UK market since 1978 and has a turnover of nearly £30m, 130 employees, and around 2,100 commercial vehicles (1,750 contract hire and 350 rental). Owned since 2003 by Eurazeo, the leading French investment firm, the Fraikin Group collectively operates 34,000 commercial vehicles across Belgium, France, Luxembourg, Spain and the UK.

Lex Transfleet’s Commercial Fleet Division has 457 staff in the UK, with 4,500 contract hire vehicles, over 1,000 rental vehicles and 8,000 customer-owned vehicles under fleet management contracts.

The combined company – which will continue to be called Fraikin – will have nearly 16,000 vehicles under its management, with a depot and office infrastructure spanning the UK, and a combined turnover of approximately £120m.

The Fraikin UK Managing Director, John Ball points out that his company has always said that it is committed to the UK market and that it had strategic growth plans. He says that in France, where Fraikin is the market leader, the parent company has 31,000 vehicles and following the acquisition it will operate approximately 50,000 commercial vehicles for customers across Europe with contract hire, rental and fleet management. The long-term strategy is for growth in the UK and other European countries.

“You can either be a small player, or a large player to remain sustainable and competitive,” said Mr Ball. “Before this acquisition, we were a medium sized player in the UK, which was unsustainable in the long-term.

“Fraikin’s customers have been won on competitive terms, and we believe that we offer a great deal of added value within our contracts, but if we were to secure that situation over the longer term, we needed to have greater commercial ‘clout’ and critical mass.”

The company now becomes one of the top three operators of contract hire of heavy commercial vehicles in the UK – but Fraikin managers say that they are determined that it will not lose its reputation for personal service delivery.

Fraikin claims that is has a contract renewal rate of 65 per cent, amongst the highest in the industry – and it believes this is a result of its emphasis on relationship management rather than an arm’s length approach to customer service. Lex Transfleet’s Coventry call centre will be refocused as a maintenance and repair management centre, in keeping with Fraikin’s personal management style. The company does not have a call centre culture and will change the emphasis from call processing to pro-active maintenance control.

Members of the management team will personally visit as many customers as possible to explain the implications of the deal.

Managers say the firm will now enter a 100-day integration programme, led by a dedicated team of senior managers, and that “all key decisions” about the future of the company and individual depots and employees will be taken in that time.

“Whenever there is major corporate activity of this type, there are, inevitably, overhead savings,” said Mr Ball. “In a sense, part of the logic of the deal is to ensure that we benefit from these. Our intention is to reduce the period of uncertainty and to be as open as possible with employees about how we are making these decisions, and when the uncertainty will be over. This is about building a company for the long term and delivering enhanced value for our customers.

“However, the key rationale for this acquisition is to provide a platform for growth which will require the retention and recruitment of highly motivated and capable staff.”

Lex Transfleet employees will also be introduced to Fraikin’s approach to relationship management, but Fraikin managers are keen to carefully “understand the business approach of Lex Transfleet’s Commercial Fleet Division which has been a successful business and adopt the best business practices of the company”.

“The task now is to bring the best of both companies together so that our combined commercial offering to customers is as powerful and competitive as we can make it.”