Leyland DAF buy-out at risk

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The Independent Online
THE proposed management buyout of Leyland DAF is being threatened by plans to sell off the beleaguered Lancashire lorry maker's lucrative African distributorships.

A briefing document from a Leyland DAF senior executive has been passed to the Independent on Sunday. It sets out fears that the company's joint administrative receivers are in negotiations to sell the dealerships to foreign competitors and local African entrepreneurs. The document claims that 'bids are currently being evaluated by the receivers for the sale of Leyland DAF's wholly-owned African companies in Ghana, Malawi, Tanzania, Uganda, Zambia and Zimbabwe'.

It continues: 'For every truck sold in Africa, three have to be sold in the UK (where competition is much tougher) to achieve the same profit.'

Leyland DAF managers are afraid that, under new ownership, the African companies will no longer deal exclusively with Leyland DAF for vehicles and parts. In Zimbabwe, for example, the local distributor already shares a production facility with Nissan, and assembles lorries from kits sent out from Lancashire.

The African sales network was created by the former Leyland chief, David (later Lord) Stokes, in the early Sixties. Despite a lack of investment, it has been a substantial contributor to group profits, especially in the troubled last three years.

A spokesman for Arthur Andersen, the joint receivers, confirmed the African network may be broken up and sold separately. 'There have been a number of offers for all and parts of the African distributorship, which are being considered,' he said. 'Some of those offers are at an advanced stage, but in every case, care is being taken to structure any arrangement in such a way that it benefits the overall business of Leyland.'

Hopes of a buyout at the lorry plant in Lancashire rose last week after managers at the smaller van works in Birmingham struck a similar deal with the receivers. Those hopes were strengthened when it emerged that a government body is prepared to inject pounds 4.8m into the Birmingham buy-out. An agreement between the receivers and DAF Trucks, the former Dutch parent, to market the lorries had also heightened speculation that a buy-out in Lancashire was imminent.

(Photograph omitted)

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