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Avis to start up IPO
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June 6, 1997: 4:04 p.m. ET
HFS subisidiary to offer up to $250 million of common stock this fall
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NEW YORK (CNNfn) - HFS Inc. announced Friday its Avis Rent A Car Inc. subsidiary will launch an initial public offering this fall.
HFS said up to $250 million of common stock, about 75 percent of Avis' operating company, will be offered to the public.
HFS will retain 25 percent for itself. It will also keep other Avis assets. "They're simply IPO-ing the operating company, which is the largest franchisee of the Avis brand," said Mark Mutkowski, equity analyst for Bankers Trust New York Corp.
HFS would retain the right to the Avis name, for which the publicly-offered operating company will pay 3.5 percent of its revenue, said Mutkowski.
HFS will also keep Wizcom, a reservation and distribution system similar to American Airlines' Sabre reservation system.
Bear Stearns & Co., managing underwriter for the proposed IPO, would not disclose the initial price of the shares or when the offering would occur. Avis has applied to the New York Stock Exchange to trade under the symbol "AVI."
HFS bought Avis for $800 million last July and also owns Value Rent-A-Car, for which it paid $175 million in March. Its other holdings include Days Inn, Howard Johnson and Ramada hotels along with Coldwell Banker and Century 21 realtors.
HFS has not been a company to stand still. It recently announced a plan to merge with CUC International Inc. in an $11 billion stock swap. That came within weeks of HFS' merger with PHH Corp., which provides vehicle-leasing and fleet-management services.
HFS spokesman Elliot Bloom said that the enthusiastic response given in April to the Hertz Corp. IPO was not a factor in the decision. Hertz shares opened at 24 and are currently trading around 32 per share.
"We acquired Avis on October 17, 1996 and it was prior to that acquisition that we announced a plan to undertake an initial public offering," Bloom explained.
Avis is the second-largest car rental company with about 540 rental locations throughout the world. It has a fleet of about 174,000 vehicles and had revenues of $1.9 billion last year. 
-- Randy Schultz
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