Loxam acquires Cramo Denmark
Finnish international rental company Cramo is to sell its main rental business in Denmark to Loxam, but will retian its Danish cabin/Modular Space business.
The part of the business being sold had revenues last year of DK149 million (€20 million) with an EBITA of DK4.6 million (€600,000). The enterprise value of the transaction is approximately €25 million. The deal will generate cash of around €24 million for Cramo but will incur a one-off loss of €1 million
The transaction includes rental equipment, inventory, customer contracts and the leases on the seven Cramo depots. The 80 employees involved with this part of the business will be offered employment with Loxam Denmark. The deal is expected to close by the end of August.
The move follows Cramo's acquisition of the modular space business of Just Pavilion last month, which included 360 cabins. See Cramo acquires in Denmark
Cramo chief executive Leif Gustafsson said: “The decision to divest our Equipment Rental in Denmark is in line with our new strategy Shape and Share, which aims towards a leading position in all Cramo markets. In the future, we will focus our investments on the potential of our Modular Space offering in Denmark.”
Loxam chief executive Gérard Déprez added: “I am pleased to welcome Cramo’s talented and experienced employees into Loxam. Together we will join forces to provide our customers with the best possible service, and build a reference and leading company in the Danish equipment rental market.”
This is an interesting and slightly unexpected move on the part of both companies. Many would have expected Loxam to have taken a rest from the acquisition trail while it digests and deals with the massive Lavendon acquisition.
However it seems that Loxam is determined to transform its current international operations in order to convert them from more minor players into market leaders. It is a policy that makes good sense, a small rental operation that is owned by a multinational has the disadvantage of not offering extensive market coverage and resources, without the usual benefits of a locally owned small business such as fast decisions and operational flexibility.
So while Loxam’s strategy has some sound logic to it, Cramo’s policy is perhaps more precarious. It is true that it has struggled to make a decent profit in Denmark and that by exiting the general rental business and focusing on portable cabin rental where it is now a leading player will almost certainly boost its bottom line. However one of the arguments for a multinational rental business is that it can support its international contractors - at least within its local region, in this case the Nordic area.
Having said that, Loxam does not offer a full product range wherever it goes – in the UK for example it has only ever been an access rental business. We have probably not seen the last of this type of deal from both companies.