Avis to Buy New Zealand Company - Analyst Blog

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Vehicle rental service provider, Avis Budget Group Inc. ( CAR ) is on track to strategically expand its global connections, looking for lucrative buy-out opportunities in markets where it enjoys substantial exposure. The company has agreed to acquire New Zealand's leading car rental company, Apex Car Rentals, facilitating the enlargement of its already strong footprint in New Zealand and Australia.

Per the deal, Avis Budget has agreed to pay nearly US$29 million in cash, in addition to Apex's rental fleet book value and potential earn-out payments based on the latter's future financial performance. The company expects to close the acquisition in October 2012, pending the satisfaction of customary closing conditions.

Based in Christchurch, New Zealand, Apex is a large independent car rental company, offering its colossal fleet services across New Zealand and Australia. The company commands a fleet size of more than 4,000 rental cars, plying across all the locations in New Zealand and Australia, including the major airports. The company has made a mark in the market since its inception in 1992 by traditionally serving value-oriented leisure travelers.

With the acquisition of this large local car operator along with its portfolio of brands, Avis expects to capitalize on various opportunities to satisfy the car rental needs of all visitors and residents in New Zealand and Australia.

Avis follows a core global strategy of partnering with leading travel brands to expand its customer reach while creating additional demand. The company recently made its first appearance in Taiwan, in an effort to expand its Asian operations.

Avis Budget's decision to enter Taiwan is backed by growing car rental demand on the island as well as its speeding economic growth. Moreover, in order to expand its geographical presence, the company is proactively looking for strategic acquisitions and alliances to bolster its growth opportunities.

The company, which competes with established industry players, such as Hertz Global Holdings Inc. ( HTZ ), Enterprise Rent-A-Car, Dollar Thrifty Automotive Group Inc. ( DTG ) and Ryder System Inc. ( R ), maintains a Zacks #3 Rank, implying a short-term Hold rating. However, we are maintaining a long-term Outperform recommendation on the stock.


 
AVIS BUDGET GRP (CAR): Free Stock Analysis Report
 
DOLLAR THRIFTY (DTG): Free Stock Analysis Report
 
HERTZ GLBL HLDG (HTZ): Free Stock Analysis Report
 
RYDER SYS (R): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CAR , DTG , HTZ , R

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