Terra Firma lines up Northgate approach

Van hire rental firm Northgate is being eyed as a possible takeover target by Terra Firma. Financier Guy Hands’ private equity business could pay up to £774m (US$1.3bn) for the company.

Northgate confirmed in a statement that it had received an indicative cash offer of £12 per ordinary share. Terra Firma made the offer a week ago in a letter to the Northgate board. Including debts, it values the company at almost £1.2bn.

The move, which came after speculation of an approach in the press, is under consideration by the company and its principal shareholders. Analysts initially assumed that GE Capital was behind the move, but Terra Firma has since been revealed as the stalking horse.

If Hands is successful in his approach, he is likely to then turn his focus to bus and train operator Arriva’s vehicle-leasing business, reports said. The Arriva business would be likely to be bolted on to Northgate.

Northgate’s principal activities are renting vehicles and selling a range of fleet products to business through a network of companies.

Its products include One Call Fleet Rental, Vehicle Insight, Van in a Box, Fleet Insurance Solutions, Norfleet Parts, Norflex and Fleet Transformer.

The group recently announced a 28.9% increase in turnover to £458.3m and a 26.2% rise in profits to £75.7m for the year ended April 30 2005.