Holman Enterprises Acquires Lend Lease Cars Portfolio

Holman Enterprises, the parent company of the vehicle lessor ARI, announced that it has acquired the leasing portfolio of Lend Lease Cars Inc. through a newly-formed subsidiary. The transaction was effective Dec. 1, 1989. No purchase price was disclosed and there was no assumption of Lend Lease Cars' debt by ARI.

Upon purchasing the assets of Lend Lease Cars. Holman Enterprises' subsidiary. ARI, became the largest privately-owned vehicle lease management group in the world. Industry-wide, the Lend Lease Cars acquisition propels ARI to the number three position among the largest owned and managed fleets with 148,500 vehicles. Prior to the acquisition, ARI had under lease or management 87,000 vehicles in the United States. Lend Lease Cars had a portfolio of 53,000 vehicles in the U.S. and 8,500 vehicles in Canada.

According to ARI, one of the reasons Holman Enterprises acquired the New Castle. DE-based lessor was because of Lend Lease Cars' strong presence among small and medium-sized fleets. On the other hand, ARI cites its own strength as being among fleets with 1.000 vehicles or more. "(The acquisition) broadened our spectrum in the marketplace." says ARI President Mike Laporta, who will be overseeing the Lend Lease Cars operation.

Following the transaction. Lend Lease Cars will be run as a separate company with a separate portfolio and operate, for the foreseeable future, from its Delaware headquarters. Officially, Lend Lease Cars is known as an affiliate of ARI.

The primary reason for maintaining Lend Lease Cars as a separate company is to minimize client disruption by avoiding the need to change billing format and to maintain continuity in client services. "If (Lend Lease Cars) clients want to come to the ARI system, it will be done at their convenience," says Laporta. "We want to give the client the opportunity to have a transparent transaction."

Another consideration favoring the maintenance of Lend Lease Cars as a separate company was that ARI's existing facilities could not absorb the additional personnel from the Delaware lessor. Presently. ARI, including Lend Lease Cars, employs over 500 people in the United States and Canada.

Holman Enterprises was first notified that Lend Lease Cars was on the selling block when it received a notice in mid-November, 1989 from Morgan Stanley, the investment banker administering the sale. ARI was one of several vehicle lessors that received a summary description of Lend Lease Cars. This was not the first time ARI tried to acquire Lend Lease Cars. When National Car Rental put its then-subsidiary Lend Lease up for sale, ARI was outbid by CRF, which subsequently changed its name to Lend Lease Cars following the acquisition.

Upon receipt of the summary description. Holman Enterprises' Vice Chairman Jack Kolb telephoned Laporta to inform him of the development. An internal task force was assembled at ARI to analyze the feasibility of acquiring Lend Lease Cars. The five-man task force consisted of: Kolb: Laporta: Ken Baittinger, senior vice president of sales and marketing: Jack Bier, senior vice president of finance, and Howard Wodack, senior vice president of operations. One of the group's responsibilities was to determine what kind of disruption such an acquisition would cause to ARI and Lend Lease Cars customers.

"This was our first concern," says Laporta. (In recent years, other vehicle lessor acquisitions have resulted in temporary service degradation to the customers of the acquired companies.) "We didn't want to repeat the errors of the past, so our prime concern was whether we could (acquire Lend Lease Cars) with the minimal disruption to our existing portfolio," adds Laporta.

Upon analyzing the summary description and the strategic implications of such an acquisition, the task force reached a consensus two weeks later to bid on Lend Lease Cars. Near the end of November, ARI contacted Morgan Stanley to state it was interested in acquiring the portfolio of the vehicle lessor.

One reason favoring the acquisition was that both Lend Lease Cars and ARI maintain their vehicle portfolios on the identical computer systems. "They're exactly the same. The same language. The same make and model," says Laporta. Another factor was the proximity between ARI and Lend Lease Cars. "It's an hour's drive, about 50 miles, between ARI's Maple Shade, NJ headquarters and Lend Lease Cars' New Castle, DE headquarters," says Laporta. In addition, ARI felt it could improve fleet services to Lend Lease Cars' customers through its sophisticated fleet management systems software. "By offering improved service, we felt we could reduce the attrition that normally occurs when there is a merger," points out Laporta. As examples of improved service, Laporta cites ARI's computerized tracking system and its "Partners in Excellence" program.

Several days following the submission of ARI's bid, Morgan Stanley contacted the lessor that its bid was accepted. Following the transaction, Bruce Hinlein resigned his position as president and chief executive officer of Lend Lease Cars. Overseeing the day-to-day operations at the New Castle facility is Don Gorman, formerly Lend Lease Cars' senior vice president of sales and marketing. Gorman, whose new title is general manager - New Castle operations, will work in conjunction with ARI's Baittinger, Bier, and Wodack. The transition team will report to Laporta and remain in place for about a year and a half.

In the first week of December, ARI informed its client base that it had acquired the portfolio of Lend Lease Cars.