|
Budget goes for a Ryder
|
 |
March 4, 1998: 11:58 a.m. ET
Car renter acquiring move-it-yourself truck rental fleet for $265 million
|
NEW YORK (CNNfn) - Budget Group Inc., owner of Budget Rent a Car, agreed Wednesday to acquire the Ryder fleet of 30,500 do-it-yourself yellow moving trucks in a cash and stock deal valued at $265 million.
Terms call for Budget to pay Ryder TRS shareholders up to $125 million in cash, $120 million in Budget Group Class A common stock, plus as much as $20 million in contingent payments in exchange for all of Ryder TRS' outstanding stock.
The stock portion of the deal represents 3.6 million shares, or nearly 10 percent of Budget Group's outstanding shares. Budget Group also will assume approximately $450 million in Ryder debt.
The deal is expected to close in the second quarter, and Budget Group expects the transaction to contribute to earnings beginning this year.
Ryder TRS, the second-largest company in the do-it-yourself hauling industry, has 4,200 worldwide locations, including 4,000 in the U.S. Ryder TRS is owned by Questor Partners Fund L.P, an investment group that bought it in late 1996.
Budget's move is widely seen as part of an effort to help insulate the company from the price wars that have convulsed the rental car industry. Many companies have gone public in the past year. Others have raised rates or curtailed costly promotions that allowed customers to rack up frequent-flyer miles whenever they rented a car.
Sandy Miller, Budget Group's chairman and chief executive officer, called the acquisition a logical step as the company seeks to build a network of transportation-related companies. She added that the purchase will reap administrative efficiencies by helping Budget streamline fleet and yield management systems.
"Budget and Ryder TRS are two of the most distinguished and trusted brand names in the vehicle rental industry," Miller said. "Ryder TRS fits well with Budget Group's portfolio of car, truck, van and recreational vehicle rental and sales holdings."
Budget Group will align its present Budget Truck Rental operations, its recently acquired Cruise America and the Ryder TRS company under a new truck rental division.
The purchase price is less than half the $575 million Questor paid when it bought Ryder's truck-rental division from Ryder Systems in October 1996. Shares of Budget closed Tuesday at 32-1/4, up 1.
Other rental companies also have sought to diversify, including Hertz, which recently added a construction-equipment rental company to its business.
Budget Group Inc. operates Budget Car and Truck Rental, the world's third-largest car and rental truck system. Premier Car Rental, another company holding, serves customers at 150 locations in 17 major U.S. markets.
|
|
|
|
|
 |
|
