After months of weighing options, Europe’s largest automaker, Volkswagen AG, agreed to sell its rental car business, Europcar, for 1.26 billion euros ($1.5 billion) in a deal with Eurazeo SA, a Paris-based private equity company.
According to a Bloomberg report, the sale is expected to be completed by the end of the second quarter with Eurazeo taking on 2.06 billion euros of Europcar debt.
When VW first flirted with the idea of selling the rental car subsidiary, the automaker had said it wanted to shed all subsidiaries outside of its main vehicle manufacturing efforts. The goal is to reduce company costs, while maintaining vehicle output, the report said.
Also at stake in the company’s future are 20,000 jobs that could be cut around Germany. In addition, VW is considering selling pieces of factories to reduce production expenses, according to the report.
Eurazeo and VW entered into talks Feb. 28 regarding the sale. Though an agreement has been made, the deal still seeks approval from VW’s supervisory board.
Founded in 1949, Paris-based Europcar operates a fleet of 220,000 vehicles in 145 countries. The unit's net income last year rose 25 percent to 66.9 million euros, Europcar said Feb. 20, without providing a year-earlier figure. Pretax profit increased 20 percent to 101 million euros, while sales rose 9 percent to 1.28 billion euros.