Fitch: No Rating Impact to Avis Following Maggiore Announcement
March 03 2015 - 10:04AM
Business Wire
Avis Budget Group, Inc.'s (ABG) announcement yesterday that it
plans to acquire Maggiore Group, Italy's largest independent
vehicle rental operator, is not expected to impact ABG's 'BB-'
rating or Stable Outlook, according to Fitch Ratings.
This reflects the limited leverage impact to ABG even if the
acquisition were to be funded entirely with debt and the
consistency of the acquisition with ABG's strategy of continued
accretive tuck-in acquisitions of independent operators outside of
the U.S. The transaction is scheduled to close in the
second-quarter of 2015.
The net purchase price will be approximately $170 million, and
is expected to be funded with available cash and/or incremental
corporate debt borrowings. As of Dec. 31, 2014, ABG had $624
million of balance sheet cash. ABG indicates that it expects the
acquisition to add approximately $160 million of annual revenues
and $30 million of adjusted EBITDA once the businesses have been
fully integrated.
Maggiore has been operating in Italy since 1947 and has more
than 140 locations. Following the acquisition, ABG will operate the
company through a Budget-Maggiore dual brand strategy intended to
build on the strength of Maggiore's brand within the Italian
market, and to accelerate the development of the Budget Car Rental
brand in Italy. In addition, ABG will continue to provide van
rentals under Maggiore's AmicoBlu brand.
ABG's ratings are supported by the strength of its brand and
franchise, its leading position in the on-airport rental market and
stable operating performance. ABG's liquidity is strong given its
improved corporate EBITDA and operating cash flow generation, as
well as its consistent access to the capital markets.
Corporate leverage, defined as corporate debt to adjusted
EBITDA, was 3.9x at Dec. 31, 2014. On a conservative basis,
assuming the proposed transaction is 100% debt-financed, corporate
leverage would increase modestly to 4.1x, pro forma, which remains
consistent with ABG's long-term articulated leverage target of
between 3x and 4x.
Based in Parsippany, N.J., ABG is a leading global provider of
vehicle rentals services through its Avis and Budget brands, which
have more than 10,000 rental locations in approximately 175
countries globally, and through its Zipcar brand, the world's
leading car sharing network, with more than 900,000 members.
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Fitch RatingsJohann JuanDirector+1-312-368-3339Fitch Ratings,
Inc.70 W. Madison StChicago, IL 60602orBrendan
SheehyDirector+1-212-908-9138orMedia Relations:Alyssa Castelli,
+1-212-908-0540alyssa.castelli@fitchratings.comElizabeth Fogerty,
+1-212-908-0526elizabeth.fogerty@fitchratings.com