Big deals

17 March 2008

Six months is a long time in the access business. In March this year we spoke to Spanish rental company Euroloc about its growth strategy, which included plans to boost its under–strength aerials fleet – it had just 400 machines at that time. Now it is August and Euroloc is the proud owner of almost 9000 lifts, thanks to the acquisition of Nacanco Spain in May (bringing around 3000 units) and in August of Umesa, with over 5000 units.

Pedro Torres, who led Nacanco's Spanish operation, has now been appointed managing director of Euroloc's new access division, with Gaspar Puig – Umesa's founder and president – becoming non–executive president of the access division and a member of the main Euroloc board. Both Mr Puig and Mr Torres are now part–owners of the group, with Mr Puig being the biggest minority shareholder. (Euroloc is 80% owned by private equity company Advent International.)

“There is a lot of work for us to do to integrate the businesses”, acknowledges Mr Torres, talking to AI in late–August. Mr Torres is himself new to Euroloc, having joined as part of the Nacanco acquisition, but he is confident that the group has the people and – importantly – the market, to do well. “The Umesa team is a good asset, and Gaspar is also a big asset. Together we have a lot of experience. Umesa and Nacanco were well managed, leading companies – I don't think we will have too many problems.”

A bonus, he says, is that he and Gaspar Puig had enjoyed a good relationship in the past; “It was one of the key reasons we were able to do the deal.”

Both Nacanco and Umesa had benefited from the rapid increase in demand for powered access in Spain that has continued for something approaching ten years. Will that growth continue? Mr Torres says it is unrealistic to expect recent high growth rates to be sustained; “It will not be as strong as the last few years, but there is still a lot of work to do. The trend is for the growth to slow down a little bit, but for three or four years will be still be growing. We are confident about this.”

Big decisions

Of course Euroloc now has some big decisions to make about the access division. Combining the Nacanco, Euroloc and Umesa businesses will obviously produce some overlap in depots. Mr Torres says decisions are still to be made about which locations will be closed and which will be merged.

The Nacanco and Umesa brands are currently being retained, although again there are choices to be made about what name to use. Mr Torres will not speculate on the likely decision. What is clear is that the access equipment will be run as a stand–alone division, and will be kept separate from the general rental activities, even where they are sharing facilities.

Pedro Torres says that one of the benefits of the merger of Nacanco and Umesa is that, although there are obvious similarities between the two businesses, each had particular specialities. Nacanco, for example, had more small electric scissors and electric booms than Umesa, while Umesa's operation has a significant truck–mounted fleet, including a recently acquired Bronto 90 m machine. Mr Torres says Umesa's expertise in truck mounts was an attraction for Euroloc and that the big truck mounts will be kept.

The two companies also shared their major suppliers – Genie, JLG and Haulotte – and these companies will be pleased to learn that, according to Mr Torres, investment plans scheduled by Nacanco and Umesa in 2007 will be kept. That means that Umesa will add some thing like 1000 units this year, with Nacanco adding a few hundred.

Of course Euroloc has not been alone in expanding its access business. Its big Spanish competitor, GAM, recently acquired Vilatel, another access specialist on a similar scale to Umesa.

How will Euroloc differentiate itself from GAM? Mr Torres is a natural diplomat and will not say any thing that could be interpreted as being critical of his competitor. However, he will allow himself the comment that Euroloc will do its best to develop new, niche access rental markets.“ We want to penetrate new markets from the traditional construction sector”, he says. The industrial sector is one obvious example, but he won't give any clues on others.

And of course, there could be more acquisitions. It is customary for rental companies, having made several big deals, to say that they will focus on integrating the new businesses. Mr Torres says there is definitely a desire within Euroloc to do that, but adds, “If the right opport unity arises every thing is possible.”

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