"The actions announced today will create separate companies which we expect to benefit from improved financial profiles that include increased earnings stability and higher returns on capital," said Mark P. Frissora, Chairman and Chief Executive Officer of The Hertz Corporation. "Our rental car and equipment rental businesses are leaders in their respective markets with valuable assets and tremendous long-term potential. Through unbundling these undervalued assets, we unleash current and future shareholder value. In fact, we believe there is a potential for multiple expansion even if both businesses only trade in line with their peers. Additionally, the separation will help each business focus on its strategic and operational performance. With respect to capital allocation, our new leverage ratios may allow for incremental return of capital to our shareholders given the current credit environment."
The Hertz board believes the planned separation of the equipment rental business from the car rental business would, among other things:
- Create a stronger growth profile and more competitive position for each company with enhanced management focus, resources and processes that are more directly aligned with each business's unique strategic priorities;
- Optimize the companies' capital structures based on the objectives of each independent company;
- Allow each business to attract and retain personnel by offering equity-linked compensation; and
- Create a more targeted investment opportunity with multiples and trading valuations that more accurately reflect the strengths and opportunities of each business.
Hertz Post Separation: A World Leading Rental Car Company
Following the separation, Hertz will remain a market leading rental car company with approximately 11,555 rental locations throughout North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand – the largest network in the world. The Company's portfolio of brands includes Hertz, the number one airport and general use car rental brand in the world, as well as Dollar, Thrifty and Firefly, which reach other fast growing consumer segments within the leisure and value markets. Through Donlen, Hertz also offers fleet leasing and management services. The rental car and fleet leasing business had annual revenues of $9.23 billion in 2013.Hertz will continue to focus on its key growth drivers following the separation. These include the integration of Dollar Thrifty, expanding its off-airport footprint and driving fleet efficiency, the introduction of new mobility services to meet consumer needs, building on its success with Donlen leasing, the roll-out of new rental technology, and its Lean / Six Sigma cost management programs.