Hertz Global Holdings, Inc. (NYSE:HTZ) is up nearly 8% on the day after the firm adopted a “poison pill” plan designed to prevent investors from acquiring a controlling stake in the car and equipment rental business.
Dan Loeb’s stake in Hertz Global
CNBC’s Scott Wapner is reporting that activist investor Dan Loeb has taken less than a 5% stake in Hertz Global Holdings, Inc. (NYSE:HTZ), which comes on the back of former Carl Icahn protégée Keith Meister of Corvex Capital taking a stake in Hertz. Speculation on CNBC was that a yet unidentified activist investors already had a position in the stock.
Why the interest in Hertz Global Holdings, Inc. (NYSE:HTZ)? While many are focusing on the well known car rental business, speculation is that a potential spin off of the capital intensive equipment rental business could unlock shareholder value. Specifically the North American equipment rental business could go up for sale, including Hertz Equipment Rental Corporation and its subsidiary, Hertz Entertainment Services, that provides equipment for Hollywood movie production. These assets are not strategically linked to the car rental business and require a significant commitment of cash.
A volatile ride for investors
Hertz Global Holdings, Inc. (NYSE:HTZ) investors have experienced a volatile ride in 2013, mostly based on the firm’s flagship car rental business. After capping its acquisition of Dollar Thrifty Automotive Group for $2.3 billion in July, the Hertz stock price started 2013 at $16.80 and ran to a high of $27 in July after the acquisition announcement. Analysts at the time were buoyed by the assumption that consolidation among car rental firms would lead to enhanced pricing power. Then Hertz had its problems in the balance of 2013. In late September the stock price dropped over 20% as Hertz cut its revenue outlook for fiscal 2013, citing lowered volumes in the U.S. airport car rental market resulting in lower fleet utilization. Then in November the Federal Trade Commission forced Hertz to spin off its Advantage rental car business it acquired in the Dollar Thrifty acquisition, citing a potential lack of competition in the $11 billion U.S. airport car rental business.
By Mark Melin