Fin24

Barloworld buys Avis, Budget

2005-10-27 20:32

Johannesburg - Diversified industrial company Barloworld (BAW) has reached agreement to acquire the Avis and Budget businesses in Denmark for DKK170m (R180m) from privately owned Biludan Gruppen A/S.

The businesses will be integrated with Barloworld's existing Scandinavian car rental operations.

The acquisition will be financed from Barloworld's internal resources.

In addition, financing facilities, which support the rental fleet, of DKK450m (R475m) will be taken over by Barloworld.

The acquisition is expected to enhance earnings for the 2006 financial year, the South African group said.

The acquisition already has the approval of the Avis and Budget licensors and there are no significant suspensive conditions outstanding.

Accordingly it is expected to be completed during November 2005.

"This is another example of our long-standing 'pacman' strategy of adding adjacent territories to our existing operations," said Tony Phillips, Barloworld's chief executive officer.

"Our car rental operations in Norway and Sweden have performed well since they were acquired five years ago.

"Rental growth has compounded at 12% annually and now stands at over 1.5-million rental days per annum."

The Danish businesses have combined annual revenues exceeding DKK 250m (R265m), sell more than 600 000 rental days per year, and operate a peak season fleet of over 3 000 vehicles operating from more than 40 rental stations.

The Avis license has been held in Denmark for 40 years, while Biludan has only recently acquired the Budget licence. The Budget business is small in comparison with the Avis operation.

The experienced operational management team in Denmark will stay in place with the exception of Ivan Nadelmann, chief executive and current majority owner of the business, who will retire as an executive but will join the board of Barloworld's enlarged Scandinavian business as a non-executive director.

Dag-Andre Johansen, currently CEO of Barloworld's existing Scandinavian car rental business, will assume responsibility for the enlarged business.

Phillips said the Danish team's experience in used vehicle sales and in light commercial vehicle rentals was likely to bring benefits to Barloworld's operations in Norway and Sweden.

Avis Norway and Avis Sweden were purchased by Avis Southern Africa Limited (AVS) in 2000, coinciding with Barloworld's acquisition of its initial minority shareholding in Avis Southern Africa.

In March 2004 Barloworld acquired full ownership of Avis Southern Africa.

The Budget licence was acquired for Norway in 2004 and, earlier this year, for Sweden.

I-Net Bridge (Business)