Hertz to acquire bankrupt Advantage Rent A Car - Car Rental News
Hertz to acquire bankrupt Advantage Rent A Car
Car Rental News - 02/04/2009
The rental car company’s $33 million offer won out over another bid.
Advantage Rent A Car, which was hit particularly hard by the economic downturn and credit crunch, filed for bankruptcy protection in December of last year. The company’s reported revenue in 2008 was $146 million, and its number of locations was eventually reduced to 20, from 140.
Hertz has experienced difficulty in the trying financial times as well, reporting a large loss for the fourth quarter, on charges. Revenue for the quarter also dropped by 16 percent, down to $1.78 billion. Earlier this week, Standard & Poor's lowered Hertz's long-term corporate credit rating deeper into junk territory.
The car rental industry has been hit by cutbacks in both business and leisure travel. A weakened U.S. economy and tight credit have made it difficult for companies to find buyers for used cars in their fleets and to secure the necessary financing to buy new vehicles.
Industry executives have been lobbying the U.S. Congress for access to Troubled Asset Relief Program (TARP) funds to help them finance new car purchases.
In the acquisition of Advantage, Hertz gains a brand name recognized by price-conscious consumers in the U.S., demonstrating that in the recession it has become easier for the big players to buy up distressed rivals.