Shares in Avis spike on news of takeover
SHARES in car hire firm Avis Europe leaped 58 per cent yesterday as investors rushed to benefit from its takeover by US counterpart Avis Budget.
Avis Budget said it would pay £636m in cash for Avis Europe to reunite the two firms after 25 years and create a group with revenues of $7bn (£4.3bn).
The 315p per share offer was at a 60 per cent premium to Avis Europe’s share price at Monday’s close – but its shares gained 114.2p in trading yesterday to end at 310.8p.
The deal will give Avis a presence in 150 countries and operations in high growth markets including India and China. It should also bring cost synergies worth $30m or more per year.
ADVISERS: CITI AND MORGAN STANLEY
PHILIP ROBERT-TISSOT
CITI
AVIS Budget has hired Citi and Morgan Stanley as joint advisers on the deal, while Barclays Capital is advising Avis Europe.
Citi’s team is headed by Philip Robert-Tissot, a service sector expert with experience working on complex and difficult deals including Kraft’s takeover of Cadbury last year, and Simon Property Group’s spat with its bid target Capital Shopping Centres.
Other notable deals he has advised on include Spanish infrastructure giant Ferrovial’s takeover of airports operator BAA in 2006.
A Citi managing director, he has previously headed the bank’s UK M&A division and is now its head of UK banking and broking. He has worked with Grant Kernaghan to seal the Avis takeover.
At Morgan Stanley, Adrian Doyle leads the advisory team. With 12 years’ experience in the bank’s M&A advisory team, Doyle advised budget airline Ryanair throughout its bid for Irish airline Aer Lingus, among other clients.
“The car rental market is more and more consolidated worldwide, it is quite a capital intensive market,” said Avis Europe chief executive Pascal Bazin.
“It is natural at one point in time to reunite two companies which are running the same brand in different territories.”
The two companies have been separate since 1986, but Avis Budget has owned a stake in Avis Europe since 1989 and floated it in London in 1997. Avis Europe’s largest shareholder, Belgian group D’Ieteren with a 60 per cent stake, has backed the deal.
Avis Budget will fund the deal by raising equity of up to $250m, its own resources and a debt facility.