BT to take its vans for an £800m spin

BT will next month take the first step towards spinning off its £800m vehicle division by inviting bids for a stake in the business. Investment bank SocGen has been appointed to drum up interest and the partner is expected to be from the venture capital or banking sector.

BT, through its Fleet Partners division, owns 58,000 vehicles. It wants to secure a financial partner in six to 12 months to grow the business before selling or demerging it. Internally, Fleet Partners is seen as "non-core but mission critical". As a result, if the business was spun off, it would retain BT as a key client.

Separately, Fleet Partners has submitted a bid for a £300m-a-year contract to manage 40,000 vehicles for the mail group Consignia.

BT has also raised the possibility of a full-blown merger with Consignia's pool. This would create Europe's largest fleet operation. However, it faces competition from French-owned PPH Arval and Britain's Lex Vehicle Leasing, which have also made approaches.

The arrival of BT's new chief executive, Ben Verwaayen, had sparked concerns that the fleet plans could be put on ice. However, a well-placed source said the deal was "very much still on". Splitting off the fleet business could create a headache for the unions, which are worried about the growing number of BT employees being transferred to new companies.

Simon Sapper, assistant secretary of the Communication Workers Union, said: "We have maintained a good relationship with Fleet Partners. But our experience of Tupe [transfer of employment regulations] has been very difficult. So changes to Fleet Partners make us wary."