Avis Budget To Buy Budget Licensee For Southern California And Las Vegas

(RTTNews) - Avis Budget Group, Inc. (CAR), a provider of vehicle rental services, has agreed to acquire its Budget Car Rental licensee for southern California and Las Vegas for around $210 million, plus the cost of acquired fleet.

The licensee being acquired operates directly at Los Angeles International and Bob Hope Burbank airports, as well as numerous local market locations throughout the Los Angeles metropolitan area. It also generates licensing income from its sub-licensees that operate throughout Southern California and in Las Vegas. The acquisition is expected to add $100 million of revenue and more than $25 million of Adjusted EBITDA to Avis Budget Group, after synergies, and is scheduled to close in fourth quarter 2014, subject to customary closing conditions.

"This substantial property is the largest Budget licensee in North America and has been on our acquisition target list for a long time. I'm pleased that we will be able to acquire this strategic asset at a multiple that will be accretive to earnings," said Ronald Nelson, Avis Budget Group Chairman and Chief Executive.

Budget Car Rental has operated in southern California since being founded by the Mirkin family in 1958, and the licensee held a long-standing, exclusive, royalty-free right to use the Budget brand there. This purchase includes owned operations at Los Angeles International Airport, the largest airport in the United States based on revenue. Further, sub-licensed locations such as Orange County's John Wayne International Airport, San Diego International Airport and Las Vegas' McCarran International Airport will now become licensees of Avis Budget Group, and the Company will now receive royalties from them.

The transaction is likely to be funded with available cash and incremental corporate debt borrowings.