NEW YORK (The Deal) -- Hertz (HTZ)HTZ, which in December adopted a poison pill as potential activists amassed shares, said Tuesday it plans to spin off its equipment rental unit and use the estimated $2.5 billion in proceeds to pay down debt and buy stock.
Park Ridge, N.J.-based Hertz said that its board had approved the split of its car rental and fleet leasing businesses from the equipment unit, which will take the Hertz Equipment Rental name and trade as an independent entity. The company said it intends for the split to be completed by early 2015, and should be tax-free for Hertz shareholders.
Hertz on Dec. 31 adopted a one-year shareholder rights plan in response to reports that activists were taking an interest, with Carl Icahn and Daniel Loeb's Third Point both reportedly accumulating shares. Hertz, which in 2012 bought Dollar Thrifty Automotive Group for $2.3 billion, saw its shares lag those of archrival Avis Budget Group (CAR)CAR in 2013, and last September warned that airport rentals were trending weaker than anticipated.
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