PARSIPPANY, N.J. -- The shakeout in the car rental industry
continued with an announcement by HFS Inc., owner of Avis Rent a
Car, that it agreed to buy Value Rent-A-Car from Mitsubishi Motor
Sales of America for $175 million in cash.
Value serves a predominantly leisure customer base from 45
company-owned locations, including 35 in Florida, where its
headquarters is located.
With the Value acquisition, HFS, which bought Avis last fall, is
following through on its plans to bring a second rental car firm
into the family to complement Avis.
Avis has about 1,200 U.S. locations and is heavily into the
corporate market.
HFS said it plans to expand Value through the franchising of
additional locations, bringing to bear its expertise as a hotel and
residential real estate brokerage franchisor of such brands as Days
Inn, Howard Johnson and Century 21.
Henry Silverman, HFS chairman and chief executive officer, said,
"Our purest competency is franchise unit growth.
"We are excited by the prospects of using our franchising and
marketing skills to expand the Value brand.
"Opportunities exist for operating synergies as well as more
efficient fleet utilization through the optimization and cascading
of the combined fleets of Avis and Value," Silverman said.
Value has about 22,000 cars in its fleet, predominantly
Mitsubishi vehicles, and HFS will cut a vehicle supply deal and
related marketing agreements with Mitsubishi, HFS said.
The Value acquisition is scheduled to be closed in the second
quarter of this year, subject to various conditions, including
antitrust clearance, HFS said.
In the third quarter, HFS plans to spin off Avis Rent a Car's
corporate-owned locations into an independent public company that
would operate as the largest Avis franchisee.
Stephen Holmes, vice chairman of HFS, said that Value franchises
would be offered to that company as well as to existing Avis
licensees and other rental car operators.
HFS said that Value reported revenues of $180 million last
year.
Richard Recchia, who is president and chief executive officer of
Value and executive vice president and chief operating officer of
Mitsubishi Motor Sales, said Mitsubishi had achieved its goals for
Value.
"Among our original purposes in acquiring Value was to assist in
developing consistent and reliable residual values for pre-owned
Mitsubishi Motors products to assure affordable lease rates for our
customers as well as to provide a steady supply of vehicles for the
critically important used car operations of Mitsubishi Motors
dealers," Recchia said.