Fleet News

Fate of Arriva expected by end of year as profits fall £2.4m

THE future of up-for-sale contract hire and leasing company Arriva Automotive Solutions is expected to be resolved by the end of the year with a sale to a bank or finance house the most likely. The revelation came with the announcement that pre-tax profits were down £2.4 million year-on-year following a residual value hit.

The pre-tax profits fall from £17.2 million in the first six months of 1997 to £14.8 million in the first half of this year in the finance division of transport solutions group Arriva - the largest element of which is Arriva Automotive Solutions - came as the division's turnover increased to £150 million from £136 million. However, the pre-tax profits drop was in-line with expectations and followed earlier statements by the company that the fall was due to tumbling residual values in the second-hand market.

Financial adviser N M Rothschild and Sons is evaluating the options for the finance division - which remain up for acquisition by a third party, a management buyout or a stock market flotation, with the former being the most likely. It is understood that prospective buyers include a number of banks and finance houses - some from overseas and some seeking first-time entry into the contract hire and leasing sector. By the end of August/early September firm bids for the company are expected.

Arriva Automotive Solutions managing director Len Clayton told Fleet NewsNet there was 'considerable interest' by 'some very, very large organisations' and it is understood that more than 10 companies have shown interest in acquiring Arriva Automotive Solutions. He expects the future of the company to be decided by the end of the year.

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