After a fierce private equity bidding war, Eurazeo, the French investment firm, has reached an agreement with Volkswagen to acquire of 100% of the capital of Europcar, the car rental outfit based in France, for €1.26bn (US$1.5bn). Eurazeo will also assume €2.06bn of Europcar debt. Europcar’s enterprise value (EV) will be €3.08bn.
With an initial equity investment of close to €900m, Europcar will be one of the largest investments for the Euronext-listed firm, which takes controlling stakes in private firms as well as taking activist positions in quoted companies. The rest of the financing comes in the form of a €2.6bn securitisation backed by Europcar’s vehicle fleet, together with a small portion of senior debt. Mandated banks are BNP Paribas, Calyon, Deutsche Bank and SG.
The Europcar network includes about 2,900 rental agencies in around 145 countries and 5,200 employees. In 2005, with an average fleet in excess of 220,000 hire cars and vans and with close to 7m hire contracts, Europcar had revenues of €1.28bn, up 9% from 2004.
The deal follows another hotly contested private equity auction after Ford Motor Co decided to divest its Hertz car rental unit to Clayton Dubilier & Rice, Carlyle Group and a Merrill Lynch. Eurazeo reportedly fought off competition from US hedge fund Cerberus, UK buyout firms Cinven and Apax, US private equity firm Bain Capital and banks Morgan Stanley and Sumitomo to win exclusivity.
Eurazeo is already present in the vehicle rental sector through Fraikin, a deal-hungry European truck and commercial vehicle rental company, although there are no plans to merge the businesses.
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