Photo courtesy of The Hertz Corp.
The board of directors at Hertz Global Holdings has approved the announced separation of its car rental and equipment rental businesses.
The separation is expected to be tax-free to Hertz Global Holdings stockholders for U.S. federal income tax purposes, according to the company. A Form 10 registration statement detailing the transaction is on file with the U.S. Securities and Exchange Commission.
Emerging from the transaction will be two companies: a new Hertz Global Holdings Inc., which will consist of the worldwide rental car business and leasing business of Donlen Corp., and Herc Holdings Inc., which will consist of the worldwide equipment rental business.
"The creation of these two public companies enables each to focus on their respective core businesses, thereby increasing the opportunity for both to create optimal shareholder value," said John Tague, president and chief executive officer of Hertz Global Holdings, who will continue in the same role at the new Hertz Global Holdings following the transaction.
The transaction will be completed through a dividend distribution of all of the capital stock of a new entity, Hertz Rental Car Holding Co. Inc., which will consist of the worldwide rental car business and the fleet leasing business of Donlen Corp. The dividend will be paid to existing Hertz Global Holdings' shareholders of record as of June 22, 2016, and, subject to the satisfaction of applicable conditions, is expected to be completed on June 30, 2016, according to Hertz.
"This separation marks the culmination of considerable work by our leadership team over the past 12 months,” said Tague. “While developing and implementing a multi-year margin improvement plan for our rental car business, we installed a strong, experienced management team at Herc and worked with them to strengthen the fundamentals of its equipment rental business. We recently completed the selection of an experienced board of directors and facilitated creation of a capital structure with the requisite financing to support the business. Both businesses are now well-positioned to realize their full potential."
Upon closing, Hertz Rental Car Holding Co. will change its name to Hertz Global Holdings and will continue to manage the company's rental car business, according to the company. Also upon closing, the current Hertz Global Holdings entity will change its name to Herc Holdings Inc. and operate the equipment rental business.
On July 1, 2016, the new Hertz Global Holdings will begin regular-way trading on the New York Stock Exchange (NYSE) under the existing HTZ symbol, while Herc Holdings will begin regular-way trading on the NYSE under the symbol HRI.
Additionally, expected members of the board of directors for Herc Holdings were named. That board will be led by non-executive chairman Herbert Henkel. Larry Silber, president and chief executive officer of the equipment rental subsidiary for the current Hertz Global Holdings, will be president and chief executive officer for Herc Holdings, according to the company.