PARK RIDGE, NJ - Hertz Global Holdings, Inc. and Donlen Corporation announced on July 17 they have signed a definitive agreement for Hertz to acquire Donlen. The transaction has been approved by the boards of directors of both companies, and by the stockholders of Donlen. The companies said they expect the transaction to be completed in the third quarter of 2011, subject to the satisfaction of customary closing conditions, including regulatory approvals.
Hertz announced that it will purchase Donlen for $250 million, and will be assuming approximately $680 million of Donlen's outstanding fleet debt.
Mark P. Frissora (left), the chairman and chief executive officer of Hertz, said, “The acquisition of Donlen expands our portfolio of transportation solutions by giving Hertz an immediate leadership position in long-term car, truck and equipment leasing and fleet management for corporate customers who need scale and sophisticated fleet management services. This range of solutions from a single provider will make Hertz unique among its peers.” Frissora added, “The integration of Donlen gives Hertz a yearly and multi-year offering that complements our hourly, daily and monthly car sharing and car rental options for customers, giving us a more stable revenue stream and new adjacent markets to leverage our existing business model.”
Hertz said the acquisition of Donlen is consistent with the evolution of its asset-light, technology-focused business model. Additionally, Hertz said this transaction is part its overall growth strategy to provide flexible transportation programs for corporate and general consumers. Hertz said that with Donlen’s existing relationships, the company will now be able to expand its fleet management capability to Europe and other international markets.
Additionally, Hertz said the Donlen acquisition provides it with a strategic consulting practice in asset and fleet management.
“We’re thrilled to be part of the Hertz global family,” said Gary Rappeport (right), Donlen Chief Executive Officer. “There are a number of synergies between the two businesses that will allow us to expand and accelerate Donlen’s offerings and continue our passionate focus on customer service and technology. Together, Hertz and Donlen have a unique opportunity to explore and create new and innovative products to bring to market.”
Based in Northbrook, Illinois, Donlen leases and manages more than 144,000 vehicles across the United States, Canada and Mexico. The news release from the companies said Donlen has posted consistent growth in pre-tax income since 2000, including 2008 and 2009 in the midst of the recession.
Hertz stated that it believes the acquisition will be credit neutral and will strengthen its business profile given Donlen's business mix and diversified lease portfolio. This transaction is immediately accretive to Hertz's earnings and is EVA positive in year one. Hertz has identified $20 million of synergies, primarily fleet-related.
Hertz is being advised in this transaction by Seale & Associates, Inc. and Barclays Capital and Donlen’s advisor is J.P. Morgan Securities LLC. Jenner & Block LLP is acting as mergers and acquisitions counsel to Hertz and Weil, Gotshal & Manges LLP is providing advice regarding structured finance matters. Skadden, Arps, Slate, Meagher & Flom LLP is serving as seller's counsel on behalf of Donlen.