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FINNING BUYS LEX HARVEY

Thursday, 1 May 2003 ( #105 ) - BEDWORTH, United Kingdom
Finning International Inc, through its subsidiary Finning UK, has bought Lex Harvey Ltd, one of the United Kingdom's largest materials handling companies, for CAD220 million (USD155.6 million). The acquisition, which is expected to be finalised on May 31, includes the business and the majority of assets of Lex Harvey and Lex Birchwood, a Toyota dealer recently acquired by Lex Harvey. The Lex Harvey companies, which provide materials handling rental and fleet management solutions, had pre-tax losses of USD6.9 million (GBP4.3 million) in 2002. The value of assets included in the transaction was USD154.7 million (GBP97.3 million), as at December 31, 2002. With the addition of the Lex Harvey assets, Finning's UK materials handling business now has 16,000 machines, more than 1,300 employees and 2002 pro-forma revenues of USD340 million (GBP213.7 million). Finning UK managing director Steve Mallett said the acquisition was a big step towards Finning International's goal of achieving 30 percent of each of its world markets. "By joining forces with Lex Harvey, the materials handling division will increase its market position significantly," he said. "The long-term nature of Lex Harvey's rental and service contracts will provide greater stability and predictability to revenues." In a move Mr Mallet admitted was "bold", Lex Harvey would be integrated into Finning, and the name, which is a strong brand in the UK market, would disappear over the next two years. Mr Mallett said Lex Harvey's parent company, the Royal Automobile Club plc (RAC), had shifted its focus away from materials handling, and Lex Harvey had "too high a cost structure" and had suffered. "Unfortunately there will be some job losses, consistent with whenever two companies join, but it is too early to say how many or in what areas these will come from," he said. Andy Harrison, RAC chief executive, said the sale was a way of "realising value from under-performing assets. "We will continue to concentrate on our growth opportunities in consumer and business services, based on our strong brands and unique capabilities," he said. Mr Mallet said Finning would conduct due diligence on Lex Harvey over the next 90 days before starting integration of the two companies.

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