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March 31, 2007 12:28 am
Enterprise Rent-A-Car, North America’s biggest car-rental operator, will expand its global reach and airport operations with an agreement to buy one of its chief rivals, Vanguard Car Rental group, which operates under the National and Alamo brands.
Enterprise declined to disclose terms on the grounds that both groups were privately owned. Enterprise, based in St Louis, is controlled by the Taylor family, which founded the company in the late 1950s.
Vanguard, based in Tulsa, Oklahoma, is owned by Cerberus Capital Management, the private-equity group, and Bill Lobeck, its chief executive.
Cerberus formed Vanguard in 2003 when it bought Alamo and National from bankrupt ANC Rental. It announced plans last summer for an initial public offering, but has yet to set a date. Cerberus sold Vanguard’s European operations to Europcar late last year.
The Enterprise-Vanguard deal, which is subject to regulatory approval, is likely to be closely scrutinised by the US antitrust authorities.
Enterprise, with a fleet of 711,000 vehicles and 65,000 employees, reported revenues of $9bn last year.
National and Alamo have a combined US fleet of about 300,000 vehicles and extensive overseas operations.
Enterprise said on Friday that the two companies’ businesses were “very complementary”. Enterprise specialises in insurance replacement vehicles and city rentals, while National and Alamo focus on airport business.
“Capitalising on the companies’ assets in these different segments will allow for more efficient fleet utilisation and enhance the combined companies’ ability to offer low prices and quality service to all customers,” Enterprise said.
Analysts have been predicting a consolidation in the US car-rental industry for some time. Margins have recently come under pressure as the three Detroit-based carmakers have cut back sales in a drive to wean themselves from low-profit sales to fleet customers.
The shift has pushed up the cost of vehicles, resulting in a steep increase in car-rental charges.
The car-rental industry has been marked by a flurry of deals in recent years. Ford Motor sold Hertz, the second-biggest operator, to a group of private-equity firms in late 2005.
They subsequently spun off part of their stake in a public offering.
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