Car rental company Avis Budget Group said Tuesday it will take over Avis Europe, from which it separated in the eighties, in a $1-billion (U.S.) deal that unites the Avis and Budget brands worldwide.
Avis Budget, based in Parsippany, N.J., will pay 315 pence ($5.16) cash per share for Avis Europe, based in Bracknell, England.
The bid is a 60 per cent premium over the closing share price on Monday - as a result, Avis Europe shares soared 58 per cent to 310.3 pence on the London Stock Exchange.
The companies said they will have combined revenue of about $7-billion and operations in more than 150 countries.
Avis Europe operates in 112 countries including a joint venture, formed in 2002, with Shanghai Automotive Industry Sales Corp. Since 2003, it has held rights to operate the Budget brand in Africa, the Middle East and Europe.
Avis Europe was legally separated from Avis in 1986 and was floated on the London Exchange, while remaining under the Avis brand. It was then taken private again in 1989, acquired by GE Capital Services in 1992 and floated again on the London Exchange in 1997.
Ronald Nelson, chairman and chief executive officer of Avis Budget, said the deal would give his company an increased presence in growing car rental markets in India and China.
"This transaction represents an outstanding opportunity for Avis Budget, and the acquisition of a business that we have long sought to own," said Mr. Nelson, adding he expected to achieve savings of $30-million a year.
The deal is subject to approval by Avis Europe shareholders.