It seems that
Hertz Global Holdings, Inc.
decision last week of adopting a one-year shareholder right plan
to prevent itself from a hostile takeover by activist investors
was taken at the right time. On Jan 3, CNBC reported that
billionaire activist investor, Carl Icahn, has acquired 30-40
million shares or 6%-9% stake in the largest publicly traded U.S.
rental-car company. The business TV broadcaster also revealed
that the acquired stake is in the form of common shares and
Following the news bulletin, the company's shares soared to a
record high of $29.81, which is the highest price since its
initial public offering in Nov 2006. However, thereafter the
price fell and the stock closed at $28.50, 0.6% lower than the
closing price as on Jan 2. Over the one-year span, Hertz shares
rose 69.6% primarily driven by its improving prospects, making
competition tough for its peer
Avis Budget Group, Inc.
) that surged 95.1%.
As per CNBC, Carl Icahn is not the only activist investor
interested in the vehicle rental company. Earlier, the television
channel had revealed that Dan Loeb's Third Point LLC and activist
investor, Keith Meister's Corvex Capital bought some stake in the
company. However, in total, their stake lies below 5%.
As per data compiled by
, Wellington Management is the biggest shareholder of Hertz with
approximately 9.2% interests in the company as of Sep 30,
Observing these "unusual and substantial" activities in its
shares, we acknowledge Hertz's decision to adopt the one-year
shareholder right plan to restrain from a possible takeover. As
per the plan, the company is entitled to issue one preferred
share purchase right for each outstanding common share after the
close of business on Jan 9, 2014. The rights will be exercisable
only when a person or group acquires 10% of the company's common
stock. However, for institutional investors, the exercisable
limit is 15%.
The shareholder right plan, also known as poison pill, reduces
chances of gaining control over a company by any person or group
through accumulation of shares in the open market without
appropriately compensating shareholders.
Hertz expects the above plan to facilitate increasing of
shareholder value through the execution of strategic initiatives.
The company's long-term strategic initiatives include the
integration of Dollar Thrifty, expansion of the off-airport
footprint, introduction of new brands catering to consumer needs,
rollout of the new rental technology and the company's Lean cost
management programs. Apart from this, Hertz is considering a
revision in its operating structure and capital allocation to
drive long-term growth.
At present, this leading airport car rental brand in the U.S.
with presence at 120 major airports in Europe holds a Zacks Rank
#5 (Strong Sell). However, some better-ranked stocks in the same
SouFun Holdings Ltd.
). While SouFun has a Zacks Rank #1 (Strong Buy), Core-Mark
carries a Zacks Rank #2 (Buy).
AVIS BUDGET GRP (CAR): Free Stock Analysis
CORE-MARK HLDG (CORE): Free Stock Analysis
HERTZ GLBL HLDG (HTZ): Free Stock Analysis
SOUFUN HLDG-ADR (SFUN): Free Stock Analysis
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