Zenith acquires Contract Vehicle Holdings to create a 100,000 strong fleet

Vehicle management business Zenith is to combine forces with Contract Vehicle Holdings (CVL) after private equity fund Bridgepoint acquired commercial vehicle contract hire and fleet management for an undisclosed sum.
Tim Buchan, the CEO of ZenithTim Buchan, the CEO of Zenith
Tim Buchan, the CEO of Zenith

The deal, announced just under three weeks after Bridgepoint unveiled the £750m acquisition of Zenith, will take the total number of vehicles the two firms manage to more than 100,000.

The latest acquisition follows a competitive sale process run by the Leeds based corporate finance team at Deloitte in Leeds.

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CVL is a leading provider in its field with a fleet of more than 22,000 vehicles under management from its Leeds headquarters.includes Coca-Cola among its clients.

It is understood the business has out-grown its competitors over the past five years and, like Zenith, CVL focuses on serving blue chip corporate customers providing them with business critical services, improving the efficiency of its customers’ fleets and reducing their costs.

Doug Smith, chief executive of CVL, said: “The combination of Zenith and CVL is an exciting opportunity and great news for our customers, employees and OEM partners.”

The market for out-sourced HGV fleet management has been growing at 12 per cent per annum and this is expected to accelerate due to the high compliance burden and complex nature of HGV fleets and the significant cost savings available to operators by outsourcing to a dedicated specialist such as CVL.

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The operators ‘O’ licence regime which is governed by the Driver and Vehicle Standard Agency (DVSA) applies to any goods vehicle with a gross weight of more than 3.5 tonnes and imposes an onerous regulatory environment on fleet operators covering training, servicing and maintenance with significant penalties for non-compliance.

There are approximately 570,000 licenced HGVs in the UK and only approximately 12 per cent of this vehicle parc is currently subject to outsourced fleet management arrangements. Should, as is widely expected, the ‘O’ licence regime be extended to include larger Light Commercial Vehicles (LCVs) then the addressable market for outsourced fleet management services will increase dramatically.

The combination of Zenith and CVL will create a market leading mobility solutions provider operating across the car, LCV and HGV markets with over 100,000 vehicles under management and an enviable customer base of blue chip corporates.

The Deloitte team that advised the CVL shareholders was led by practice senior partner Martin Jenkins and included David Frith, Oliver McRae and Jeremy Thomas.

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Mr Jenkins said: “CVL is a business of great quality that is highly respected by its customers and competitors alike. Its robust business model, quality of earnings and exceptional track record of uninterrupted profit growth meant the business was very attractive to both strategic and private equity acquirers. The shareholders of CVL are confident that the business will thrive and fulfil its significant potential under Bridgepoint and Zenith’s ownership”.

Mr Smith added: “We selected Deloitte as our advisors because of their deep sector expertise and the strength of their team. They ran a highly efficient and effective process and delivered on all their commitments to the shareholders who are delighted with the outcome.”

The sale of CVL is the third significant transaction in the automotive services market that the Leeds Corporate Finance team of Deloitte has announced within the past three months. In December the team advised Equistone Partners on its investment in T.O.M. Vehicle Rental, a leading UK provider of long-term flexible hire commercial vehicle solutions with revenues of over £200 million. Then in January the team advised Hg Capital and Management on the £750 million sale of Zenith to Bridgepoint. Deloitte’s

Martin Jenkins, one of Yorkshire’s best known and most experienced deal makers, has focused on the automotive services for over a decade, advising private shareholders, management teams and private equity firms on investments and M&A in the sector.

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