Loxam Buys Mills for $722M, Exits Brazilian Stock Market

French equipment rental giant Loxam has finalized a significant acquisition, agreeing to purchase a controlling stake in Mills, a leading Brazilian player in machinery and equipment rentals, for approximately R$ 3.8 billion (US$ 722 million). This move effectively takes Mills private, delisting it from the B3 stock exchange. The transaction, which requires regulatory approval from Brazil's antitrust body CADE, represents a substantial premium for Mills' shareholders.

The deal structure involves Loxam acquiring the combined 50.2% stake held by the founding Nacht family, private equity firm Southern Cross Group (SCG), and the Argentine Oxenford family. The agreed-upon price of R$ 16 per share signifies a 22% premium over the prevailing market price, valuing Mills at R$ 3.8 billion, its highest valuation since 2014. Following the acquisition of the controlling block, Loxam is obligated to extend a tender offer to minority shareholders under the same terms.

Loxam, Europe's largest equipment rental firm and a global top-five player with annual revenues of €2.5 billion, sees significant strategic alignment and operational synergies with Mills. While Mills boasts a robust portfolio encompassing aerial platforms, heavy machinery, and formwork solutions, Loxam's existing Brazilian operations focus on compact equipment, lighting towers, and temporary power generation. This complementary offering is expected to create a more comprehensive service provider in the Brazilian market.

The acquisition marks a significant expansion for Loxam in Brazil, where it first entered in 2015 by acquiring Degraus. Subsequent strategic moves included the purchases of Motormac Rental and A Geradora, specializing in generator rentals. In 2023, Loxam generated R$ 580 million in Brazil. The integration of Mills, a company founded in 1952 by Romanian immigrant José Nacht and a leader in aerial platforms across Latin America, will substantially bolster Loxam's market presence and fleet capabilities.

Mills has demonstrated strong financial performance, reporting R$ 502 million in gross revenue for the first quarter, a 10.7% increase year-over-year. Its net profit nearly tripled to R$ 197 million in the same period, with leverage decreasing to 1.1x. The company has also been active on the M&A front, having recently acquired JM Empilhadeiras for R$ 279 million and Next Rental for R$ 180 million, underscoring its growth trajectory prior to this acquisition.

Sergio Kariya, CEO of Mills, indicated that the negotiation process with Loxam commenced six months ago. He highlighted the founding family's desire to find a partner committed to the company's long-term perpetuation and aligned cultural values, particularly concerning employee welfare and environmental stewardship. The future leadership and operational structure of Mills post-acquisition will be determined after CADE's approval.

This transaction underscores a broader trend of consolidation within the global equipment rental sector, driven by the pursuit of scale, operational efficiencies, and expanded service offerings. The Brazilian market, with its infrastructure development needs and diverse industrial base, continues to attract significant international investment. Financial advisors for Mills included Lazard, with legal counsel from Lefosse and Trindade Advogados. EuroLatina Finance advised Loxam, supported by legal teams from Spinelli Advogados and Demarest Advogados.