Fitch: No Rating Impact to Avis Following Maggiore Announcement
This reflects the limited leverage impact to ABG even if the acquisition were to be funded entirely with debt and the consistency of the acquisition with ABG's strategy of continued accretive tuck-in acquisitions of independent operators outside of the U.S. The transaction is scheduled to close in the second-quarter of 2015.
The net purchase price will be approximately \$170 million, and is expected to be funded with available cash and/or incremental corporate debt borrowings. As of Dec. 31, 2014, ABG had \$624 million of balance sheet cash. ABG indicates that it expects the acquisition to add approximately \$160 million of annual revenues and \$30 million of adjusted EBITDA once the businesses have been fully integrated.
Maggiore has been operating in Italy since 1947 and has more than 140 locations. Following the acquisition, ABG will operate the company through a Budget-Maggiore dual brand strategy intended to build on the strength of Maggiore's brand within the Italian market, and to accelerate the development of the Budget Car Rental brand in Italy. In addition, ABG will continue to provide van rentals under Maggiore's AmicoBlu brand.
ABG's ratings are supported by the strength of its brand and franchise, its leading position in the on-airport rental market and stable operating performance. ABG's liquidity is strong given its improved corporate EBITDA and operating cash flow generation, as well as its consistent access to the capital markets.
Corporate leverage, defined as corporate debt to adjusted EBITDA, was 3.9x at Dec. 31, 2014. On a conservative basis, assuming the proposed transaction is 100% debt-financed, corporate leverage would increase modestly to 4.1x, pro forma, which remains consistent with ABG's long-term articulated leverage target of between 3x and 4x.
Based in Parsippany, N.J., ABG is a leading global provider of vehicle rentals services through its Avis and Budget brands, which have more than 10,000 rental locations in approximately 175 countries globally, and through its Zipcar brand, the world's leading car sharing network, with more than 900,000 members.