Hertz Global Holdings, Inc. HTZ announced that it has penned a deal with LOXAM Group (Loxam), related to the potential divestment of Hertz Equipment Rental Corporation’s (“HERC”) France and Spain businesses to Loxam.
The company is in the negotiation process with Loxam and intends to close the deal by transferring to the latter, the entire share capital of Hertz Alquiler de Maquinaria, SLU and Hertz Equipement France SAS. Further, terms of the deal include the sale of 60 French and 2 Spanish locations. Additional terms regarding the share purchase were kept under wraps.
Like HERC, Loxam is also an equipment rental company, which operates in Europe. The company is most likely to expand its footprint in the European rental industry with this buyout, as it will enhance its French market share and strengthen its network in Spain.
On the other hand, this move will benefit HERC by helping the company focus on key and specialty market growth. Moreover, this divestment complements HERC’s separation plan from its parent company, as it is consistent with the company’s aim of boosting shareholder value and profitability.
HERC has been gearing up for its separation from the parent company since Mar 2014, when Hertz announced the decision to split into two independent, publicly traded companies. The first company will include its car rental businesses, comprising Hertz, Dollar, Thrifty and Firefly as well as its fleet-leasing services division, Donlen. The second company, HERC, will run Hertz’s equipment rental business.
In connection with this separation, HERC recently announced a couple of management changes, including the appointment of Richard Marani as Chief Information Officer and Bruce Dressel as Chief Operating Officer. While Marani is expected to ensure proper technological support for smooth information systems’ transformation, Dressel is anticipated to comprehend a growth strategy for HERC in order to boost performance.
However, Hertz currently carries a Zacks Rank #5 (Strong Sell). The company has been under the scanner due to the accounting errors identified in its 2011 financial results. This entails complete review of its financial results for fiscal years 2011, 2012 and 2013.
Previously, Hertz had stated that it will take some time to file updated financial statements owing to these accounting issues. We note that Hertz has not yet filed its statements and there still remain uncertainties as to when it would.
Stocks to Consider
Better-ranked stocks in the same industry include comScore, Inc. SCOR, PFSweb Inc. PFSW and Rentrak Corporation RENT. All these stocks sport a Zacks Rank #1 (Strong Buy).
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