(Reuters) Volkswagen (VOWG_p.DE) and German bank Metzler have sold Dutch-based financing company LeasePlan to a consortium of investors for 3.7 billion euros ($4 billion), the carmaker said on Thursday.
Volkswagen has its own in-house leasing business, VW Leasing GmbH, which made it harder to justify the 50 percent stake in LeasePlan when Europe’s largest carmaker is cutting costs.
LeasePlan expects the sale to a consortium comprising Dutch and Danish pension funds, the sovereign wealth funds of Singapore and Abu Dhabi, Goldman Sachs and private equity firm TDR Capital to be concluded by the end of the year. It must be cleared by the Dutch Central Bank and the European Central Bank.
Founded in 1963 and now the world’s largest vehicle lease fleet management company, LeasePlan operates in 32 countries, has 6,800 employees and manages 1.42 million vehicles. It made a net profit of 372 million euros in 2014.
Volkswagen and its then partners paid 2 billion euros for the business in 2004. Global Mobility Holding, through which Metzler and VW own LeasePlan, had a book value of 3.697 billion in VW’s 2014 accounts, meaning the increase in the business’s value over the past decade has already been booked.
Volkswagen is aiming to make annual savings of 5 billion euros by 2017 at its VW passenger car brand to close a profitability gap with rivals such as Toyota.
The consortium will make an equity investment of around half the purchase price, with the rest to be funded by a 480 million euro mandatory convertible note and a 1.5 billion euro debt facility. LeasePlan will not be responsible for the debt.
The consortium will support LeasePlan management’s strategy and expansion plans, Dutch pension fund manager PGGM said. LeasePlan will remain an independent company.
People familiar with the matter had told Reuters previously that VW was in advanced talks to sell the business for roughly 3 billion euros.