Hertz Global Holdings Inc. announced April 9 that it has completed the acquisition of Advantage Rent A Car assets for approximately $33 million. Advantage generated full year 2008 revenues of about $146 million.
Hertz will operate 20 Advantage locations, initially, and the company acquired the rights to the Advantage brand name (including trademarks, copyrights, etc.), Web site and other assets. Hertz states that the acquisition will be instrumental in Hertz’s long-term growth strategy, and meets several strategic objectives, which include:
- Leveraging Advantage’s presence in all of the top leisure states: Florida, California, Hawaii, Arizona and Colorado and in six of the Top 10 leisure markets: Orlando, Denver, Phoenix, Los Angeles, San Diego and Honolulu;
- Further expansion into the price-oriented travel demographic through higher penetration of 3rd party online bookings. Advantage had more than 17 percent market share on Expedia, Travelocity, Orbitz, Cheap Tickets, Priceline retail and Hotwire retail. Advantage’s 3rd party online market share in several key leisure markets ranges from 10 percent in Orlando to 28 percent in Denver and 34 percent in Salt Lake City;
- A means for Hertz to further penetrate online booking engines without negatively affecting Hertz's core business;
- Providing Hertz a second brand to sell to corporate accounts and to market with key travel partners;
- Extending the useful life of vehicles in Hertz’s rental fleet for Advantage’s fleet needs.
Mark P. Frissora, Hertz’s chairman and CEO, commenting on the acquisition, said, “Hertz realized significant value for the Advantage assets we have acquired. By combining our operations excellence and expense discipline with Advantage’s leisure market focus, we forecast generating double-digit EBITDA margins within the next two years, translating to a 2x EBITDA multiple, which is favorable compared with other car rental acquisitions. The upside growth potential for the price-oriented leisure market and our ability to leverage Advantage with corporate accounts and travel partners make this acquisition both financially and strategically advantageous for Hertz.”
On March 31, Hertz prevailed against another bidder in a U.S. bankruptcy court auction for the assets of Advantage Rent a Car. Advantage operated primarily from rental locations at key tourist travel destinations in the U.S. The Bankruptcy Court formally approved Hertz’s bid April 6, 2009.