A $1 BILLION joint venture between PHH Europe and Arval Service Lease has created Europe's biggest fleet management and leasing company. The mega-alliance, announced on Tuesday, creates a colossal pan-European fleet of 545,000 vehicles under management or lease with a further 450,000 units in North America.

The deal also includes PHH's 1.3 million fuel cards in the UK and its accident management operation. The deal sees Arval, the wholly-owned subsidiary of France's largest bank BNP Paribas, paying $800 million for an 80% stake in the company which will own PHH Europe, with the remaining 20% continuing to be owned by PHH parent Avis Group Holdings. The new operation will immediately become Europe's largest fleet management company ahead of Lease Plan (500,000 vehicles) and GE Capital Fleet Services (385,000 vehicles) with 380,000 in the UK and 165,000 on the continent.

In Europe the alliance will be branded Arval/PHH and in North America it will be branded PHH/Arval. The partnership builds on a transatlantic cross-selling agreement which PHH and Arval have had since 1995. As part of the alliance agreement Avis will license PHH North America's internet-based fleet management system PHH InterActive to the joint venture, for which Avis will receive an annual royalty. BNP Paribas will have eight seats on the alliance company's board and Avis will have two. The transaction is expected to be completed by June.

The existing management structures at PHH and Arval Service Lease - formerly Ryland Multifleet - in the UK will remain unchanged. The management of Arval/PHH will be united under Francois Dambrine, head of BNP Paribas' fleet management operations, assisted by John Cullum, chief executive of PHH Europe, as head of UK operations, and Philippe Noubiel, chief executive officer of Arval, as head of continental European operations.