Arval UK has announced the sale of AllStar Business Solutions Ltd (AllStar) to FleetCor Technologies, Inc (FleetCor), a leading independent global fleet card provider, for £194m.
AllStar is the UK fuel card business subsidiary of Arval, a wholly owned subsidiary of BNP Paribas.
In addition to providing FleetCor with a strong presence in the UK market, the transaction includes a commercial agreement between the two companies for at least the next five years. As a result, Arval will continue to provide fuel management solutions as part of its fleet management offer and the companies will work together to deliver fuel products and services to its customer base.
The transaction was simultaneously signed and completed on December 13, 2011.
Bart Beckers, general manager of Arval UK, comments:
“We believe that this sale is a very positive move for AllStar employees, partners and customers. FleetCor provides global expertise, scale, best practices and experience in the fuel card market. By working with them over the coming years, we expect our fuel management products and services to be enhanced further which will benefit our customers.”
Q&A released by Arval UK:
Q Why has Arval sold its card business?
A Arval has been reviewing the UK card line of business for some time which is unique within the Group and following analysis can not be leveraged further by Arval outside the UK. The Arval Group business model allows companies of all sizes to outsource their fleet management and company fleet related risks through a comprehensive bundle of funding and fleet solutions, whilst the business model for AllStar is to deliver transactional services. With this fundamental difference, AllStar IT platforms require a specific approach and further third party growth will be enabled by removing the link to Arval as some potential third party partners view Arval as a direct competitor. As a result, Arval favours a long-term partnership with a global card expert that can enhance the value chain while maintaining the possibility for Arval to continue to deliver fuel management solutions to its customers. We expect this sale to support future growth and ensure that both businesses achieve their long-term potential.
Q So does Arval no longer have a fuel proposition?
A While Arval no longer owns the AllStar fuel business, it will continue to provide fuel management products and services as part of the bundle of services that it offers, making use of the AllStar fuel payment services. The two companies have committed to a strategic partnership for at least the next five years which will allow Arval to support all customer fleet needs, including fuel management.
Q Is the fuel card business losing money?
A No, the AllStar fuel business is highly profitable, delivers value to its customers and remains well positioned for future growth. The sale of this business is a strategic one and is in no way a reflection of the performance of the AllStar business.
Q Who is purchasing the card business?
A FleetCor, the Global Fleet Card Company, is a leading independent global provider of specialized payment products to businesses. FleetCor’s payment programs enable businesses to better manage and control employee spending and provide card-accepting merchants with a high volume customer base that can increase their sales and customer loyalty. FleetCor serves commercial accounts in North America, Europe, Africa and Asia.
Q How much are they paying?
A Arval UK has announced the sale of AllStar Business Solutions Ltd to FleetCor Technologies, Inc for a cash consideration of £194m.
Q What does the strategic partnership mean?
A As part of the deal, the two companies have committed to a strategic relationship for at least the next five years. This means that Arval will continue to provide fuel management solutions as part of its bundle of products and services and the companies will work together to deliver fuel products and services to customers of all sizes.
Q Will there be redundancies as a result of this transaction?
A For Arval there will not be any redundancies as a direct result of this transaction. FleetCor are not planning for any redundancies amongst AllStar staff being transferred as a result of this transaction. They will remain in a new area of the existing Arval premises in Swindon.
Q Have your customers been informed?
A Our customers, suppliers and key partners are being informed of this change. We are working closely with them to answer any questions that they have.
Q What will this mean for customers taking both fleet and fuel products with Arval?
A Joint customers continue to receive the full range of fleet and fuel management products and services. The strategic partnership means that they continue to benefit from the expertise and account support within each business. AllStar and Arval have been operating as two separate business lines for some time so customers will see very little change to the service that they receive. Over time the fuel management proposition and billing will be further integrated into the bundle offered.
Q Is Arval selling the fuel business to generate funds to acquire another leasing company?
A The sale of the AllStar business is not designed to generate funds for any particular reason. AllStar is a unique business within the Arval Group and after analysis can not be leveraged further by Arval outside the UK. We are divesting the business to what we believe is the right partner to enhance the value proposition allowing Arval to deliver fuel management products and services just as effectively through this outsource solution for payment services. This sale will support both businesses in their future growth.
Q Why is the Card business being sold rather than absorbed by BNP Paribas?
A The fuel card business is very specific and doesn’t fit with BNP Paribas’ activities in the UK.
Q Why does BNP Paribas need to generate funds at the moment?
A The sale of AllStar is not designed to generate funds for BNP Paribas. It results from a strategic review of Arval UK and is in line with Group’s overall strategy of disposing its non core assets.
Q Is this part of a wider strategy from BNP Paribas to sell of its assets?
A This transaction is very specific to Arval and its UK businesses including AllStar. The rationale is essentially to optimise each company’s franchise. In addition, this disposal will have a limited but positive impact on the Group’s capital ratios.