August 14, 2022

DealBook: Avis Budget to Buy Avis Europe for $1 Billion

Avis Budget Group said Tuesday that it would buy Avis Europe for $1 billion, in a sign that the car rental company may be moving on from its long campaign to take over Dollar Thrifty.

The deal, which values Avis Europe at £3.15 ($5.16) per share, is set to close in October, pending the customary approvals.

Avis Budget said it had received “irrevocable” commitments from the target company’s board as well as its controlling shareholder, D’Ieteren, a publicly traded Belgian company that holds nearly 60 percent of Avis Europe.

“The transaction reunites the global operation of the Avis and Budget brands under one corporate umbrella, and is both financially and strategically compelling,” said Ronald L. Nelson, chief executive of Avis Budget Group, predicting that operating synergies would reach $30 million a year.

“Because Avis Europe and Avis Budget generally do not have operations in the same jurisdiction, the acquisition is not expected to face significant antitrust obstacles,” he said.

Antitrust obstacles have been holding back Avis’s $1.8 billion offer for Dollar Thrifty, made last September and under review by the Federal Trade Commission.

It is also being challenged by Hertz, which has offered $2.24 billion to combine with Dollar Thrifty, the fourth-largest rental car company in the United States.

Both Hertz, the second-largest, and Avis Budget, the third-largest, having been trying to rival Enterprise, which dominates the sector.

But now Avis is looking abroad.

“While Avis Budget will continue to monitor the Dollar Thrifty situation, the company’s focus squarely will be on completing and integrating the significant acquisition of Avis Europe,” the car rental firm said, noting that it had “made progress” with the Federal Trade Commission.

The deal with Avis Europe, which draws 86 percent of its revenue from France, Germany, Italy, Spain and Britain, would give the newly combined group yearly revenue of about $7 billion and operations in 150 countries.

The European company, listed in London and based in the British town of Bracknell, employs more than 5,000 people and reported revenue of more than 1.5 billion euros last year, based on seven million rental transactions. It holds 18.3 percent of the European market, and has a presence in the continent’s 75 major airports.

Avis Europe shares rose 113 pence, or 57.7 percent, to 310 pence in early morning trading in London.

Avis Budget will finance the acquisition with a combination of cash reserves, debt and the issuance of $250 million in Avis Budget common stock.

The American group hired Morgan Stanley and Citigroup as its advisers and Kirkland Ellis as its legal counsel. Avis Europe hired Barclays Capital as its sole financial adviser, and chose Freshfields Bruckhaus Deringer as legal counsel.

Article source:

Speak Your Mind