This story has been corrected to clarify details about the equipment rental division spinoff.
NEW YORK (TheStreet) -- Hertz (HTZ) is up today on the news that it will be spinning off its equipment rental division in a move that will raise about $2.5 billion in capital for the car rental company. The news has acted as a buffer against the company's disappointing Q4 earnings. Hertz stock was up 1% to 27.44 on Tuesday.
The spinoff is expected to be completed in early 2015 though it has been discussed by the company since early last year. Hertz plans to use the money to pay down debt and finance a $1 billion share buyback program that was authorized earlier this year.
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Hertz, Dollar, Thrifty and Firefly brands will all survive the spinoff as the company refocuses on its car rental operations.
"The Hertz Corporation today announced that its board of directors has approved plans to separate into two independent, publicly traded companies," Hertz said, in its press release. "The two companies will be 'Hertz,' comprised of the Hertz, Dollar, Thrifty and Firefly rental car businesses as well as Donlen, a provider of fleet leasing and management services, and 'HERC,' the Hertz Equipment Rental Corporation. The separation is planned to be in the form of a tax-free spin-off to Hertz shareholders, and the Company has received a Private Letter Ruling from the Internal Revenue Service that allows Hertz to separate the businesses in a tax-efficient manner. Hertz expects the separation of HERC to close by early 2015."