News that Hertz Global Holdings Inc. (NYSE: HTZ) will spin off its construction equipment rental business pleased investors, who pushed shares sharply higher after the opening bell Monday. The Financial Times reported on Friday evening that the spin-off deal valued the unit at about $4.5 billion.
The construction equipment rental business accounted for $1.1 billion of Hertz’s revenue in the first nine months of 2013. The company had explored a spin-off to shareholders or a reverse Morris trust, which is a combination of a spin-off and a merger. The New Jersey-based rental company also was rumored to be talking with potential merger targets.
In an apparent attempt to ward off pressure from billionaire investor Carl Icahn, the company enacted a poison pill near in December of 2013, following consultation with its outside advisers, Bank of America Merrill Lynch and Barclays. However, Icahn later denied having a stake in or targeting Hertz.
Details of the potential spin-off of the equipment business announced Friday could be released as early as this week, according to the Financial Times. Hertz is slated to report fourth-quarter earnings Tuesday before the market opens.
Shares of competitor Avis Budget Group Inc. (NASDAQ: CAR) were down slightly in early afternoon trading.
Hertz shares opened at $28.01 Monday morning, up more than 7%, and they were trading around $27.30 in the noon hour. Shares are now down less than 5% year to date and have traded between $19.73 and $29.81 in the past year.
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