ESTERO — Hertz Global Holdings netted $2 billion late Thursday from the spin-off of its equipment-rental business.
Hertz will use $395 million of that sum to buy back shares. It also plans to lower corporate debt and to boost its car-rental services.
“Completing the separation of the equipment rental business delivers on the commitment our board made to shareholders in March 2014,” says John Tague, president and CEO of Hertz, in a statement. “Over the past 12 months, we've prepared the business unit to successfully operate as a stand-alone, publicly traded company by resizing its operations, and recruiting and installing a new management team as well as a board of directors with deep industry and public company experience.”
Hertz' equipment-rental business is now called Herc Rentals and it starts trading today as a public company under the symbol HRI. It has 4,600 employees in about 280 locations, mostly in North America.
The spinoff will allow Hertz to focus on initiatives that include replacing its fleet of cars with newer models, upgrading its information technology and broadening opportunities with ride-sharing services such as Uber and Lyft. Already, Hertz says it has improved its balance sheet over the past year by restructuring debt and selling the majority of its stake in Car Inc., China's largest rental-car company.
“We've accomplished a great deal to refocus the company on being an industry leader positioned to capitalize on opportunities in the evolving transportation market,” Tague says in a statement. “We are today a considerably stronger company with great prospects for performance improvement and poised to deliver on our three-to-five year plan target of 16-to-18% [earnings before interest, taxes, depreciation and amortization] margins.”