Avis Budget Group Inc. (NYSE: CAR) said Tuesday that it has agreed to acquire Avis Europe in exchange for 3.15 pound in cash for per Avis Europe Share. The total deal value comes to about $1 billion. The deal could be considered as a move on for Avis Budget from its unsuccessful long campaign of acquiring Dollar Thrifty Automotive Group Inc. (NYSE: DTG).
The deal is expected to close by October, pending some customary approvals, is expected to benefit the company both financially and strategically. The acquisition will also give Avis Budget an increased presence in the fast-growing international markets of India and China. After the completion of the deal, the combined business is expected to have revenues of $7 billion and operations in more than 150 countries.
"This transaction represents an outstanding opportunity for Avis Budget, and the acquisition of a business that we have long sought to own," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "The transaction re-unites the global operation of the Avis and Budget brands under one corporate umbrella, and is both financially and strategically compelling. We expect the combination of our two companies will allow us to more effectively serve vehicle-rental customers worldwide, and to achieve operating synergies of more than $30 million a year.”
"From a financial perspective, we expect the acquisition of Avis Europe to be accretive to Avis Budget's earnings per share on a pro-forma basis with synergies, excluding any integration and other one-time costs and the non-cash effects of purchase accounting. 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.
After the announcement, shares of Avis budget gained 5.45 percent to $16.83 in the early hour of trading at Wall Street.
