Avis Budget this morning confirmed an agreed bid for Avis Europe, valuing the European car rental business at £636 million.
The combined Avis Budget and Avis Europe groups will have revenue of approximately $7 billion and owned or licensed operations in more than 150 countries. The deal will also give Avis Budget an increased presence in rapidly growing international markets, including India and China.
Avis Budget chairman and chief executive Ronald Nelson said: "This transaction represents an outstanding opportunity for Avis Budget, and the acquisition of a business that we have long sought to own.
"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 synergies of more than $30 million per year. In addition, the acquisition will give Avis Budget an increased presence in rapidly-growing international markets, including India and China.
"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 the Avis Europe and Avis Budget Groups generally do not have operations in the same jurisdiction, the acquisition is not expected to face significant antitrust obstacles."
Avis Europe chief executive Pascal Bazin said: "Over the last three years, we are proud to have delivered a successful transformation and turnaround of our business, together with successful geographic development in fast growing territories and development of new mobility offers.
"Today's announcement of the recommended acquisition of Avis Europe by Avis Budget enables us to provide both a compelling substantial immediate cash return to shareholders and an exciting opportunity for Avis Europe's customers, employees, partners and licensees to benefit from the many advantages that will come from being part of a combined Avis Europe and Avis Budget Group with our two strong global brands, increased scale and improved access to capital."
The move is being seen as a possible shift away from Avis Budget's pursuit in a bidding war with Hertz for Dollar Thrifty.
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