Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

Hertz

No description
by

Dorothy Mensah

on 2 April 2015

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of Hertz

BY: Mark Silverman, David Gomez,
Dorothy Mensah, Simon Brunaud

Outline
Hertz Acquisition of Dollar Thrifty
Recommendations
Hertz & Industry Overview
Why is there consolidation in the Industry?
The Acquisition of Dollar Thrifty
Was the acquisition a good move?
Competitors
Buying niche players/small players: Does it make sense?
Recommendations
Deal was announced on the 27th August 2012
Acquisition $2.6 Billion
8% premium
Price $87.50
Hertz shares price rose by 8.1 % on the announcement date
Reasons why Hertz wanted this acquisition
It will make Hertz, the second biggest US car rental with 23.9% of the market share.
$160 million of cost synergies
8% Premium is pretty low in such a competitive industry. They spent 2.3 Billion as Dollar Thrifty had $300 M of Cash
Tried to acquire the company in 2007 and 2010 for $1.2 Billion
Fear that Avis will Acquire Dollar-Thrifty
Financials for Pre-Acquisition cont.
Post-Acquisition
Would Buying Smaller or Niche Players or competitors in other geographies make more sense?
Why is the Industry so Consolidated?
Second largest car rental company.
Main Competitors are Enterprise and Avis
Acquired Dollar Thrifty
Operates to 150 countries worldwide
Key suppliers are: Ford Motor Corp, General Motors, and Toyota Motor Corp.
Hertz is a car and equipment rental company that works with business and leisure travelers as well as contractors
Already Hertz has a diverse presence by creating several segment or niches.
United States of America Federal Trade Commission
Niche Products
Exotic Cars
Niche Products
Flexible Rentals
Hertz Rent2Buy
Niche Products
Luxury Cars
Electric Vehicles
24/7 vehicle access
Rent by the hour or day
No annual fees
Fuel & Insurance included
Luxury & Green vehicle options
One way & Round Trip Options
Guaranteed Weekday Availability
Stock Price Analysis
Stock Price was highly impacted by the Financial crisis in 2008 (Lower revenues, bad EPS, trouble to find financement)
Mid 2008 stock price started to recover as they reached a loan agreement
Beginning 2010 Hertz made a bid of $1.2 Billion rejected by Dollar Thrifty (stock price was around $45 per share)
Thanks to good financial results and to rumors of the potential acquisition by Avis and Hertz
In August 2012, Dollar Thrifty announced that it will be acquired by hertz for $87.5 per share ($2.6 Billion)
Offer consistent with the one made in 2010
Conclusion for Acquisition
Good side of the Deal:
8% Premium could appeared cheap for such a competitive industry (30% Premium in average for this kind of industry)
Increased its market share by 5-6%
“Victory” over Avis
Market share price rose by 50%
Bad side of the deal:
The transaction required a lot of money
Avis bought Zipcar for $500M
Not performing as well as expected regarding the financial on the short-term
Financials Pre- Acquisition cont.
Post-Acquisition Cont.
Hertz should continue to move into global markets
Enterprise Global Expansion
Focusing on niche products that are the most profitable
Think about acquiring SixtGroup
15% stake in eHi Car Service
-Launching electric vehicle rental service
-Begin in Shanghai and then Beijing
-Slow adoption
New partnership with Sfakianakis Group in Greece
-Access to many countries in South Eastern Europe
-Now has access to about 90% of European rental market
Avis Europe
Plans to re-launch Budget brand in Europe
-Budget had poor performance in the past as Avis Europe prioritized the Avis brand
-Wants to capture 5% of European market and a long-term goal of 10%
Financials for Pre-Acquisition
BY: Mark Silverman, David Gomez,
Dorothy Mensah, Simon Brunaud
Bibliography
Avis Budget Group Inc (NMS: CAR): Company Details, Business Segments. Rep. Mergent Online, n.d. Web. 8 Apr. 2013. <http://0-www.mergentonline.com.ilsprod.lib.neu.edu/companydetail.php?range=5&scale=AsRep¤cy=AsRep&compnumber=36690&pagetype=businesssegments&Submit=Refresh>.

Hertz Global Holdings Inc (NYS: HTZ): Company Details, Business Segments. Rep. Mergent Online, n.d. Web. 8 Apr. 2013. <http://0-www.mergentonline.com.ilsprod.lib.neu.edu/companydetail.php?range=5&scale=AsRep¤cy=AsRep&compnumber=116020&pagetype=businesssegments&Submit=Refresh>.

Hertz Global Holdings Inc (NYS: HTZ): Company Financials. Rep. N.p.: n.p., n.d. Mergent Online.
Web. 2 Apr. 2013. <http://0-www.mergentonline.com.ilsprod.lib.neu.edu/companyfinancials.php?
pagetype=asreported&compnumber=116020&period=Annuals&dataarea=ALL&range=5&footnotes=on¤
cy=AsRep&scale=AsRep&Submit=Refresh>.

Hertz Global Holdings Inc (NYS: HTZ): Competiotors. Rep. N.p.: n.p., n.d. Mergent Online. Web. 2 Apr.
2013. <http://0-www.mergentonline.com.ilsprod.lib.neu.edu/competitors.php?compnumber=116020>

Dollar Thrifty Automotive Group, Inc. (NBB: DTGF): Company Financials. Rep. N.p.: n.p., n.d.
Mergent Online. Web. 3 Apr. 2013. < http://0-www.mergentonline.com.ilsprod.lib.neu.edu/
companyfinancials.php?
pagetype=asreported&compnumber=93805&period=Annuals&dataarea=ALL&range=5&currency=AsRep
&scale=AsRep&Submit=Refresh>

Avis Budget Group Inc (NMS: CAR): Company Financials. Rep. N.p.: n.p., n.d. Mergent Online. Web.
7 Apr. 2013. < http://0-www.mergentonline.com.ilsprod.lib.neu.edu/companyfinancials.php?
pagetype=asreported&compnumber=36690&period=Annuals&dataarea=ALL&range=5&currency=AsRep
&scale=AsRep&Submit=Refresh>

"Avis Buying Zipcar in $500 Million All-cash Deal." NBC News. N.p., n.d. Web. 09 Apr. 2013.
"Avis to Buy Zipcar, Enter Car-sharing Business." USA Today. Gannett, n.d. Web. 09 Apr. 2013.
"EDGAR Pro." EDGAR Pro. N.p., n.d. Web. 09 Apr. 2013.
"Hertz Buying Dollar Thrifty for $2.6 Billion in Cash." Bloomberg. N.p., n.d. Web. 09 Apr. 2013.
Newman, Rick. "Hertz-Dollar Thrifty Deal One More Spin of Car-Rental Roulette Wheel." US News. U.S.News & World Report, 28 Aug. 2012. Web. 09 Apr. 2013.
Newman, Rick. "Hertz-Dollar Thrifty Deal One More Spin of Car-Rental Roulette Wheel." US News. U.S.News & World Report, 28 Aug. 2012. Web. 09 Apr. 2013.
Newman, Rick. "Hertz-Dollar Thrifty Deal One More Spin of Car-Rental Roulette Wheel." US News. U.S.News & World Report, 28 Aug. 2012. Web. 09 Apr. 2013.

http://www.autorentalnews.com/article/story/2012/05/niche-and-famous-exotic-car-rental-company-blossoms-in-l-a/page/2.aspx

http://colinmather.hubpages.com/hub/Car-Rental-Franchise-or-Independent
http://www.nydailynews.com/autos/u-s-largest-electric-car-market-2020-article-1.1244784

http://www.abramsconsulting.com/ARN11p18-23.qxd.pdf

http://www.forbes.com/sites/altheachang/2012/07/11/porsches-now-available-for-rent

http://www.prnewswire.com/news-releases/hertz-on-demand-to-operate-lufthansa-airlines-employee-carpool-of-1000-vehicles-199851181.html
http://www.prnewswire.com/news-releases/hertz-completes-acquisition-of-donlen-corporation-128909238.html
http://www.teslamotors.com/
https://www.hertz.com/rentacar/specialoffers/index.jsp?targetPage=2013_newyears_3offers.xml&gclid=C http://www.autorentalnews.com/article/print/story/2013/01/say-hello-to-sixt.aspx
http://www.hertz.com/rentacar/abouthertz/index.jsp?targetPage=investorrelations.jspuyVubYCFeRxOgody3AA0g
Why is There Consolidation?




-Help minimize competitors, which would lead to higher prices for customers and eventually lead to higher profit margin
-To obtain economy of scale
-Help generate more efficient operations and to help cut down cost
-To help benefit investors: to increase market share
-Major players are Enterprise, Hertz, and Avis (rule 98% of the rental market of aiprorts)-Enterprise (National and Alamo) Hertz (Dollar-Thrifty) Avis( Budget)
-Even though Enterprise, Hertz, & Avis control most of the industry, you still manage to see the names of the acquired companies at the airports
-To create a sense of economy of scale and minimize competition in efforts to increase market growth and profit margin
Low growth market
So Why is there consolidation?
The first largest company in U.S. airports by sales
Owns a global fleet of 525,000 passenger cars
Are seen in North America, Europe, and Australia
Car Rental Industry
4 Tiers of car rental brands
Premium: Avis, Hertz, & National (Enterprise)
Mid-priced: Budget (Avis) & Alamo (Enterprise)
Value: Dollar, Thrifty, & Enterprise
Deep Discount: Advantage, Payless, & Fox
Full transcript