US-BASED truck maker Paccar has tightened its grip on the European truck market in the six to 18 tonne class by acquiring UK manufacturer Leyland Trucks Ltd.
Paccar, which also owns truck makers DAF in the Netherlands and Foden in the UK, declined to say how much it paid for Leyland. In the USA, Paccar has the Peterbilt and Kenworth truck brands.
Last year, Leyland built 10,050 vehicles and earned a $17.3 million profit on sales of $283 million. The company emerged as an independent truck maker in 1993, following a management buy-out. Its previous owner, DAF, had gone into receivership.
Leyland continues to supply vehicles to DAF.
'The acquisition by Paccar ensures continuity of the Leyland operation,' said Leyland Chairman John Gilchrist, who led the management buy-out. Gilchrist said he will resign after the deal is finalized this month.
Leyland will remain an independent operation.
'We will report directly to the Seattle headquarters. There won't be an integration with other Paccar subsidiaries, nor relocation of production,' said Leyland spokesman Martin Hayes. 'But ties with DAF will be close.'
DAF already buys about three-quarters of Leyland's output. These trucks are sold through DAF's European network as the 45/55 model range. Leyland handles its own distribution outside western Europe.
Paccar is looking for synergies between its two UK subsidiaries, and it wants to strengthen these two companies' links with DAF.
'We will continue to keep each of them independent,' said John Hartquist, Paccar's manager for strategic planning. 'But we are excited about some of the synergies, especially in the field of purchasing and exploring talent at the individual companies.'
Combined purchasing could extend to sharing engines and transmissions.
Paccar might also look at streamlining sales operations, said Hartquist.
Foden builds around 700 specialized trucks a year. The company has recently developed the new 2000 range of vehicles. They use a DAF 75/85 series cab that has been modified by DAF designers specifically for Foden.
DAF is enthusiastic about Paccar's acquisition of Leyland.
'Of course, this is very good, for both Paccar and us,' said Ron den Engelsen, DAF's head of corporate communications. 'The benefits of the existing production ties with Leyland can only improve.'
Sources within DAF say that the company is relieved that no other truck maker has got control at Leyland. 'Otherwise we would have had to buy our 45/55 from a rival company,' said one.
Hayes refused to comment on press reports last year that Isuzu and Volvo were potential bidders for Leyland.
'Isuzu is one of our clients and will remain so for the duration of contracts,' he said. 'But Paccar might review the contract in the longer term.'
Paccar built 79,000 units last year, of which 18,500 were made by DAF. DAF contributed $1.8 billion to Paccar's 1997 sales of $6.5 billion.
Paccar's purchase of Leyland will not affect the joint development program between Renault and DAF for a medium-sized truck, said a Renault Vehicule Industrieles spokeswoman.