PARSIPPANY, N.J. and LONDON -

Avis Budget Group will purchase Avis Europe for about $1 billion in a deal slated to close later this year, the companies announced Tuesday. Avis Budget also offered an update with regards to its pursuit of Dollar Thrifty Automotive Group.

Avis Budget said that its talks with the Federal Trade Commission on the DTAG matter have taken steps forward, but the company stressed that its attention right now is geared toward its Avis Europe deal.

“While Avis Budget will continue to monitor the Dollar Thrifty situation, the company’s focus squarely will be on completing and integrating the significant acquisition of Avis Europe,” Avis Budget said in a statement.

Regarding the Avis Europe transaction, Avis agreed to buy all outstanding shares of Avis Europe — an independent publicly traded company — for euro 3.15 in cash per share, which translates to about $1 billion (USD).

Provided it gains the necessary Avis Europe shareholder and court approvals and obtains all regulatory clearances, the closing date is slated for October.

Many shareholders are already agreeing to green-light the deal, officials indicated. Majority shareholder D’leteren — which owns 60 percent of Avis Europe’s shares — gave a “‘hard’ irrevocable commitment” in favor of the deal, as has Avis Europe’s board of directors.

Explaining a bit more about Avis Europe, officials noted that the company operates the Avis brand through its 3,100-plus-location network that spans 112 countries and through wholly-owned subsidiaries in 13 countries as well as through license agreements in another 99 countries.

Additionally, the company operates the Budget brand through a 950-location network spread across 50 countries.

Per the deal’s terms, the value of Avis Europe’s ordinary shares is about euro 635 million (roughly $1 billion USD).

“This transaction represents an outstanding opportunity for Avis Budget and the acquisition of a business that we have long sought to own,” stated Ronald Nelson, Avis Budget Group chairman and chief executive officer.

“The transaction reunites the global operation of the Avis and Budget brands under one corporate umbrella and is both financially and strategically compelling. We expect the combination of our two companies will allow us to more effectively serve vehicle-rental customers worldwide and to achieve operating synergies of more than $30 million a year,” he continued.

“In addition, the acquisition will give Avis Budget an increased presence in rapidly-growing international markets, including India and China,” Nelson noted.

He added: “From a financial perspective, we expect the acquisition of Avis Europe to be accretive to Avis Budget’s earnings per share on a pro-forma basis with synergies, excluding any integration and other one-time costs and the non-cash effects of purchase accounting. Because Avis Europe and Avis Budget generally do not have operations in the same jurisdiction, the acquisition is not expected to face significant antitrust obstacles.”

Once the purchase is official, the companies’ combined annual revenues will be about $7 billion, executives noted. Their operations (owned or licensed) will be comprised of more than 150 countries.

Avis Budget plans to pay for its purchase with a combination of the following:

—Its own cash resources.
—Equity funding by possibly issuing as much Avis Budget common stock as $250 million.
—Debt financing arranged by a syndicate of banks and/or proceeds from issuing debt securities.

“Over the last three years, we are proud to have delivered a successful transformation and turn-around of our business, together with successful geographic development in fast growing territories and development of new mobility offers,” said Avis Europe chief executive officer Pascal Bazin.

“Today’s announcement of the recommended acquisition of Avis Europe by Avis Budget enables us to provide both a compelling substantial immediate cash return to shareholders and an exciting opportunity for Avis Europe’s customers, employees, partners and licensees to benefit from the many advantages that will come from being part of a combined Avis Europe and Avis Budget Group with our two strong global brands, increased scale and improved access to capital,” Bazin added.