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ESTERO — Car rental giant Hertz announced its long-awaited plan to spin off its equipment rental business will be completed by the middle of next year.
Activist investors including Carl Icahn have pressured Hertz to spin off the equipment rental business as a separate publicly traded company. But accounting and operational issues at Hertz since it moved its headquarters to Southwest Florida from New Jersey two years ago have stalled those efforts.
With about 4,500 employees, Hertz Equipment Rental has 280 branches, of which 270 are in the United States and Canada, and the remaining branches are in the United Kingdom, China and through joint-venture arrangements in Saudi Arabia and Qatar. In addition, the business operate through 14 franchisee-owned branches in Greece, Iceland, Portugal and the French island of Corsica in Europe. Other franchisees are located in Afghanistan, Panama and Chile.
“We've taken a number of actions this year to drive performance and preparing the equipment rental business to operate as a stand-alone company is among the most significant,” says John Tague, Hertz president and CEO, in a statement announcing the rental division's initial securities filing. “There are fundamental differences in the business models for vehicle versus equipment rental, and we believe the separation will enable more distinct focus on each by the respective separate management teams, as well as provide the equipment rental business with direct access to capital markets.”
No date has been scheduled for the spinoff, but Hertz says it will be completed by the second quarter. “We are confident that our separation from Hertz Global Holdings will provide us better flexibility and focus to pursue growth opportunities within our core equipment rental markets, which also will enable us to provide better value to our customers, employees, and suppliers,” says Larry Silber, president and CEO of Hertz Equipment Rental, in a statement.
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