Vehicle rental service provider,
Avis Budget Group Inc.
) 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
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.
AVIS BUDGET GRP (CAR): Free Stock Analysis
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The company, which competes with established industry players, such
Hertz Global Holdings Inc.
), Enterprise Rent-A-Car,
Dollar Thrifty Automotive Group Inc.
Ryder System Inc.
), maintains a Zacks #3 Rank, implying a short-term Hold rating.
However, we are maintaining a long-term Outperform recommendation
on the stock.