Element Financial Corporation ("Element"), one of Canada's leading independent equipment finance companies, announced that it has entered into a definitive agreement to acquire 100% of TLSI Holdings Inc., the holding company of TLS Fleet Management ("TLS"), from Scotiabank and the company's other minority shareholders for aggregate consideration of approximately $146.7 million plus debt (the "Transaction"). The Transaction provides Element with more than $430 million of lease assets.
Element's expansion into the fleet leasing industry represents a natural extension of its core business of providing equipment financing to businesses across Canada. Upon completion of the Transaction, Element would become Canada's largest independent Canadian leasing company, with total assets of approximately $1 billion.
Element believes that the acquisition of TLS enhances the diversification of Element's operations by providing a low-risk earnings stream that is complemented by significant fee based revenue, including cost management and fleet optimization services. The strength of TLS' platform is evidenced by its strong track record of double-digit return-on-equity. Upon completion of the Transaction, TLS will continue to operate under the "TLS Fleet Management" brand name, within a new vertical of Element named "Element Fleet Leasing."
The vehicle fleet leasing industry is characterized by a number of attractive industry fundamentals. There are high barriers to entry, as a broad vendor network is difficult to replicate while the value-added service offerings help reinforce strong customer relationships. Furthermore, as the recent economic downturn has caused customers to keep their fleet vehicles for longer periods of time, a significant growth opportunity is expected to emerge as customers replace and upgrade their aging fleets.
"Our vision is for Element to become one of North America's leading independent providers of lease financing," stated Steven Hudson, Chairman and Chief Executive Officer of Element. "The acquisition of TLS will accelerate the growth of our business both through the strength of its platform and the extensive cross-selling opportunities with our other clients. Element's extensive familiarity with the fleet management business, gained through the senior management team's prior involvement with Newcourt Fleet Management, will enable us to capitalize on this rare opportunity," Mr. Hudson added.
Read the full press Element Financial press release.