Jenner & Block, Debevoise Advise On $2.5 billion Hertz Unit Spin-off
Jenner & Block and Debevoise & Plimpton advised The Hertz Corporation on the company’s spin-off of its equipment rental business to shareholders in a transaction valued at $2.5 billion.
The car rental company announced the move Tuesday, promising to use proceeds from the tax-free spinoff to pay down debt and back a new $1 billion share buyback program that will take the place of a previously announced $300 million buyback. Hertz said Tuesday it had already used $87.5 million to repurchase its own shares under the previous program.
The transaction will create a new stand-alone public company called Hertz Equipment Rental Corporation that will operate about 335 branches in Canada, China, France, Saudi Arabia, Spain and the United States. The business rents industrial equipment such as air compressors, forklifts, power generators, trucks and trailers. The unit, which had total revenues of $1.5 billion last year, also includes an entertainment services division that rents lighting and aerial equipment used in the U.S. entertainment industry.
Hertz, based in Park Ridge, N.J., will now turn its focus to its rental car and fleet leasing businesses, which generated $9.23 billion in revenue last year and includes the Hertz, Dollar, Donlen, Firefly and Thrifty brands. Hertz also released its financials for last year’s fourth quarter and reported a 10.2 percent increase in revenue, to $2.6 billion, from the same quarter the previous year. That increase fell below analysts’ predictions, though, as Hertz blamed the “difficult fourth quarter” on lower-than-expected pricing and increased expenses.
The New York Times notes that Hertz—in the face of pressure from activist investors, including Carl Icahn and hedge fund manager Daniel Loeb— adopted a one-year shareholder rights plan, or poison pill, in December in order to avoid losing control of the company’s board of directors.
Jenner & Block is serving as corporate and securities counsel to Hertz on the spin-off with a team led by M&A chair Thomas Monson, securities cochair William Tolbert Jr. and corporate partner Jeffrey Shuman. Monson and Shuman are in Chicago, while Tolbert is in Washington.
The Debevoise team, all based in New York, is led by finance partner David Brittenham and tax partner Gary Friedman. Tax counsel Rafael Kariyev is also working on the matter.
Hertz’s general counsel is Jeffrey Zimmerman.
@|“New Deals” reports on major business transactions and the attorneys involved. Tom Huddleston Jr. is a reporter for Law Journal affiliate Am Law Daily. Submit items by e-mail to firstname.lastname@example.org.