Hertz Spin-Off News Gives Stock a Needed Boost
News that Hertz Global Holdings will spin off its construction equipment rental business pleased investors, who pushed shares sharply higher after the opening bell Monday. Details of the deal could be announced this week.
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News that Hertz Global Holdings Inc. (NYSE: HTZ) will spin off its construction equipment rental business pleased investors, who pushed shares sharply higher after the opening bell Monday. The Financial Times reported on Friday evening that the spin-off deal valued the unit at about $4.5 billion.
The construction equipment rental business accounted for $1.1 billion of Hertz’s revenue in the first nine months of 2013. The company had explored a spin-off to shareholders or a reverse Morris trust, which is a combination of a spin-off and a merger. The New Jersey-based rental company also was rumored to be talking with potential merger targets.
In an apparent attempt to ward off pressure from billionaire investor Carl Icahn, the company enacted a poison pill near in December of 2013, following consultation with its outside advisers, Bank of America Merrill Lynch and Barclays. However, Icahn later denied having a stake in or targeting Hertz.
Details of the potential spin-off of the equipment business announced Friday could be released as early as this week, according to the Financial Times. Hertz is slated to report fourth-quarter earnings Tuesday before the market opens.
Shares of competitor Avis Budget Group Inc. (NASDAQ: CAR) were down slightly in early afternoon trading.
Hertz shares opened at $28.01 Monday morning, up more than 7%, and they were trading around $27.30 in the noon hour. Shares are now down less than 5% year to date and have traded between $19.73 and $29.81 in the past year.
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
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