Eurazeo builds car rental platform

Europcar, a Eurazeo portfolio company, is building Vanguard’s European franchise for €670 million.

Europcar, a European car rental company owned by Paris-based private equity firm Eurazeo, has agreed to acquire the European operations of Vanguard Car Rental of North America for €670 million ($860 million).

Europcar: building car rental platform

The deal, financed through high yield bonds, represents a multiple of 12.7 times the company’s estimated 2006 EBIT, before savings due to the merger, a statement said.

Rothschild gave financial advice to Europcar while Paris-based firm Bredin Prat supplied legal advice.  Vanguard had no financial advice and Weil Gotshal & Manges acted as lawyers.

The transaction is subject to regulatory approval.

Europcar and Vanguard have also signed a transatlantic partnership agreement.  The two businesses will continue to run as separate networks.

Vanguard EMEA manages a fleet of more than 43,000 vehicles and holds more than two million rental contracts.  In 2005 the company had revenues of €405 million.

Vanguard operates under the National Car Rental and Alamo Rent A Car brands. 

Europcar has more than 2,950 rental outlets in over 145 countries. With a fleet of over 200,000 vehicles and almost seven million rental contracts signed in 2005, Europcar provides its services to its clients throughout Europe, Africa, the Middle East, Latin America and the Asia-Pacific region.

In 2005, Europcar achieved revenues of €1.28 billion, representing nine percent growth on 2004.  In the first half of 2006, revenues increased by 14.6 percent compared to the first half of 2005.

Eurazeo bought Europcar from Volkswagen in March 2006 for €3 billion. 

Eurazeo has a history of investing in the car rental sector.  In January 2003 the firm led a group of investors in the €805 million acquisition of Italian truck rental business Fraikin from Fiat.

Car rental has proved popular with private equity investors.  In 2005 it provided the second largest buyout of all time when Clayton, Dubilier & Rice led an investment group including The Carlyle Group and Merrill Lynch Global Private Equity in the $15 billion acquisition of Hertz from Ford Motor in September.