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Iridian boosts holding in Avis Budget Group by 43%

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Feb. 23 2015, Updated 10:33 a.m. ET

Iridian increases position in Avis Budget Group

Iridian Asset Management raised its position in Avis Budget Group, Inc. (CAR) in its 13G filing in January. Iridian increased its position to 5,395,808 shares from an earlier position of 3,773,401 shares, representing a 43% increase. The filing also revealed that Iridian has a passive 5.1% stake in Avis.

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Avis Budget Group: Leading provider of car sharing and rental

Avis Budget Group, Inc. (CAR) operates under the following brands: Avis, Budget, Zipcar, Budget Truck, Payless, and Apex.

The company’s operations take place in the following three segments: Truck Rental, International, and North America.

Below is a summary of the Avis brands.

  • Avis is a rental car supplier serving the leisure and commercial segments within the travel industry.
  • Budget is a rental vehicle supplier that focuses on the industry’s value-conscious segments.
  • Zipcar is a car-sharing company in Europe, Canada, and the United States.
  • Budget Truck is a  truck rental business in the United States with more than 20,000 Budget trucks. It operates through a network of more than 300 company-operated locations and more than 1,000 dealer-operated locations.
  • Payless is a car rental brand operating in the industry’s deep-value segment.
  • Apex is a car rental brand operating in the deep-value segments of Australia and New Zealand.

Avis gets attractive financing deal by completing $650 million asset-backed bond offering

In a recent announcement, Avis Budget Group (CAR) revealed that its Avis Budget Rental Car Funding LLC subsidiary secured an offering of $650 million of fixed-rate, five-year, asset-backed bonds with an approximate weighted-average interest rate of 2.7%.

The proceeds from this offering are expected to be used predominantly for refinancing vehicle-backed debt that matures and for supporting the growth of the company’s business. The attractive terms of this offering will enable the company to fund its fleet in North America at highly attractive rates.

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Avis engages in strategic acquisitions to expand its footprint

Avis Budget Group’s licensee acquisitions suggest that the company is expecting earnings to outpace licensee revenue. In December 2014, the company announced its agreement to buy the company’s Scandinavian licensees, worth $100 million in revenue, for roughly $50 million. The company also announced earlier that it’s expanding its Apex brand beyond Asia-Pacific into Latin America.

Avis recognized for service excellence at World Travel Awards

At the 2014 World Travel Awards, Avis Car Rental was recognized as the World’s Leading Car Rental Company and the World’s Leading Luxury Car Rental Company. The company’s website, Avis.com, was recognized as the World’s Leading Car Rental Company Website.

Iridian’s 13G positions

According to its 13G filing, Iridian Asset Mnagement didn’t initiate any new positions.

The fund increased its holdings in the following companies:

  • Myriad Genetics, Inc. (MYGN)
  • Service Corporation International/US (SCI)
  • Avis Budget Group, Inc. (CAR)
  • Omnicare, Inc. (OCR)
  • Halozyme Therapeutics Inc. (HALO)
  • Theravance Inc. (THRX)
  • AOL Inc. (AOL)
  • Lexmark International, Inc. (LXK)
  • The Valspar Corporation (VAL)
  • W.R. Grace and Company (GRA)
  • Sealed Air Corp. (SEE)
  • Pitney Bowes Inc. (PBI)
  • Graphic Packaging Holding Company (GPK)
  • SemGroup Corporation (SEMG)

A significant aspect of the fund’s 13G filings is that Iridian Asset Management dropped the following two key positions:

  • Dresser-Rand Group, Inc. (DRC)
  • Wyndham Worldwide Corporation (WYN)

In the next part of this series, we’ll see how Iridian changed its holdings in Omnicare, Inc. (OCR).

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