EXCLUSIVE: UK: Sun Capital stamps authority on LDV Group
UK post office vans manufacturer LDV Group on Monday opened its Drews Lane gates to the press 90 days after its GBP20m (US$35m) takeover by private equity firm Sun Europe.
Sun Europe, an affiliate of US-based Sun Capital Partners, has spent GBP25m on wages, capital, paying off suppliers and restarting production at the Birmingham-based facility since it took over in December. During the same period, LDV's workforce has fallen from 950 to 650, and more redundancies are expected to follow.
The light commercial vehicle manufacturer, newly-named LDV Group, is bidding to make a profit by the fourth quarter of 2006 after teetering on the edge of administration, and eventually aims to double the 200 vehicles it rolls out per week.
LDV Group interim CEO Charles Megan said: "We have been here for 90 days and accomplished an enormous amount of hard work. Already, LDV is a better, leaner, more productive business.
"LDV Group is a more responsive business with the capability to grow quickly and it has financial stability under the stewardship of Sun Europe."
Megan told just-auto that despite export potential, and a GBP2m deal already brokered in Turkey, the continuation of business closer to home is its key strategy.
The Florida-based financial firm is not planning to export the LDV brand to the US - at least for the time being. Megan added: "It is not part of the plan to break into the US. It is on the radar but only slightly on the radar."
Sun Capital Partners, which has acquired 110 companies since forming 10 years ago and made US$27bn in profits during 2005 alone, also has a pedal supplier and chilled transportation business in its US portfolio.
Megan said that Sun does not see the automotive industry as "especially profitable" on the whole, but hopes LDV Group will grow in value over the next five years.
Prior to Sun Europe's arrival at LDV, production had stopped for two weeks and 700 of the 1,000-strong work force had been sent home. After the deal was struck, production of LDV's Pilot and Convoy ranges ended, with the final vehicles allocated to customers and dealers.
But after sales of its successful new Maxus van (development of this was originally begun by now-defunct Daewoo in eastern Europe) jumped 123% during February, LDV Group projects a 50% year-on-year increase by the end of 2006.
Sun Europe managing director Phil Dougall said: "It is clear and simple that we think LDV is a great business with terrific prospects. Fundamentally we like the brand and the position of LDV in the market place.
"We have an outstanding track record in recognising companies which have the necessary attributes for success and our team is unique in that it is made up both of deal makers and turn-round specialists.
"We are committed to this purchase and not in the business of stripping off assets."
Dougall added that the acquisition could last anywhere between three and seven years.
Next month (25 April), the new group will launch its minibus and chassis cab products, together with a new Maxus range, at the UK commercial vehicle show.
LDV Group projects sales of 5,600 for its minibus, 32,400 for its chassis, and 98,000 for its Maxus Van - edging the tiny independent towards a larger stake in total UK light van volume, currently around 225,000 units a year and led by the Ford Transit and Mercedes Sprinter models.