Element Financial acquires scalable platform with Cincinnati's Bush Truck Leasing
Shares of Canadian equipment finance company Element Financial Corporation (TSE:EFN) rose Tuesday after the company said it agreed to acquire Cincinnati-based Bush Truck Leasing from its founder.
The price of Tuesday's transaction was not disclosed, but Element said that Bush Truck Leasing's current portfolio of finance receivables have a book value of around $55 million. As part of the deal, Element has also acquired Bush Specialty Vehicles, which provides vehicle up-fitting and maintenance services to Bush Truck Leasing and for other third party customers.
The deal, which is expected to close at the end of August, will be funded from Element's existing capital, and is anticipated to be accretive starting next year.
“This strategic acquisition provides a scalable origination platform for extending our well-established transportation equipment finance capabilities into the U.S. market,” said president of Element, Bradley Nullmeyer, in a release Tuesday.
Originally founded in the 1970s, Bush Truck Leasing and Bush Specialty Vehicles provide vehicle financing solutions and related services to more than 70 national and regional enterprise clients involved in local pick-up, delivery and transportation services.
“Under Michael’s [Bush, founder] continued leadership and the improved access to capital that Element is able to bring to the table, we anticipate growth in this market going forward as we continue serving the needs of the company’s clients,” added CEO of Element, Don Campbell.
Once the deal is closed, the business will become part of Element's U.S. operations.
The news comes less than a month after General Electric (NYSE:GE) announced that its financial unit, GE Capital, is selling its Canadian vehicle fleet to Element for $570 million. The combined fleet of cars, light trucks and medium-duty trucks will serve GE Capital's customer base under a strategic alliance that will use the Element Fleet Management brand. Element said it expects this transaction would boost its yearly operating earnings by $0.05 per share.
With total assets of approximately $2 billion, Element operates across North America in three verticals of the equipment finance market - large ticket and mid ticket equipment leasing and financing, and vehicle fleet leasing and management solutions.
Shares of the company rose 3.7 per cent on Tuesday, to $11.58.