Moving ahead with its portfolio enhancement strategy, Avis Budget Group Inc. (CAR) inked a deal to acquire its licensee for the Avis and Budget brands in the three kingdoms of the Scandinavian region for approximately $50 million. The acquired licensees include Norway, Sweden and Denmark, operating both the Avis and Budget brands at prime places across the region including Oslo, Stockholm, Copenhagen and Sweden's Arlanda and Goteberg airports.
The leading vehicle rental company in North America, Australia and New Zealand stated that the Scandinavian region provides greater opportunities for acquiring licensees and will contribute meaningfully to its strategic initiative of expanding geographic footprint. .
Avis Budget expects the acquisition to generate positive synergies and be accretive to its annual revenue and adjusted EBITDA when fully acquired. The company estimates the acquisition to add over $100 million to annual revenues and about $10 million to adjusted EBITDA, including the royalties that the licensee was paying to the group.
The deal is anticipated to close by the end of first-quarter 2015, after satisfying the customary closing requirements. Once acquired, the company plans to club the operations of these regions with that of the United Kingdom and make it functional under a newly formed Northern Unit within the EMEA region.
Avis Budget, which competes with Hertz Global Holdings, Inc. (HTZ), is on track to extend its operations through alliances, acquisitions and joint ventures. The company keeps investing in the growing markets where car rental demand is rising. Some of its recent ventures to expand globally include its partnership with Inspirato, the purchase of its Budget Car Rental licensee for Southern California and Las Vegas, and the acquisition of Zipcar Inc.
Earlier this week, the company acquired the brand Apex Car Rentals and announced the launch of additional operations in Costa Rica and the Cayman Islands.
We believe that these strategies, along with better customer support systems, are likely to boost this Zacks Rank #3 (Hold) company’s top line.
Other Favorably Ranked Stocks
Better-ranked stocks in the same sector include Core-Mark Holding Company Inc. (CORE) and WageWorks Inc. (WAGE), each carrying a Zacks Rank #2 (Buy).
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