Avis Budget is buying its long-term exclusive licensee partner Avis Europe for £636m, it was announced this morning
US-based Avis Budget has licensed use of the Avis and Budget brands to Avis Europe since the 1980s, with Avis Europe running operations in Europe, Africa, the Middle East and Asia as a separate independent company. This licensee argreement was due to expire in 2036.
The £636m purchase price represents a 60.2 per cent premium over last night’s closing price, and 63.3% over the average closing price over the past three months. At 9.45am today, the shares had rocketed by more than 50% to reach 310.2p
The business already share some technology and marketing initiatives. Working more closely together, synergies of $30m per annum are expected.
Ronald L. Nelson, chairman and chief executive officer of Avis Budget, said: “The transaction re-unites the global operation of the Avis and Budget brands under one corporate umbrella, and is both financially and strategically compelling…In addition, the acquisition will give Avis Budget an increased presence in rapidly-growing international markets, including India and China.”
In the full release, Nelson noted “the success that Avis Europe has achieved in growing its business, integrating its operations, expanding the Budget brand and re-aligning its cost structure to address the global economic downturn.”
Avis Budget also said that the existing contractual and statutory employment rights and pension rights of all employees of Avis Europe will be fully safeguarded, with the caveat that “Avis Budget reserves the right to reorganise the enlarged group created by the Acquisition as strategy evolves.”