VW said to explore acquisition of car rental group Europcar

Automotive Industry

Source: Automotive News Europe, 2020-06-24

Volkswagen is in talks to acquire car rental company Europcar Mobility Group in a deal that would allow the German automaker to better capitalize on its fleet, people familiar with the matter said on Tuesday 23 June.

The acquisition would come as the French company struggles to cope with the economic fallout of the COVID-19 pandemic, which has weighed on travel around the world and sapped demand for car rentals.

It would represent a reversal for Volkswagen, which sold Europcar to investment firm Eurazeo in 2006.

Volkswagen has reached out to Europcar to express its interest in an acquisition and carry out due diligence, one of the sources said. The talks are preliminary and a deal is far from certain given the financial toll of the coronavirus outbreak on Europcar, the sources added.

Europcar, which has market capitalization of €390m ($441m) and net debt as of the end of March of more than €1bn, has also attracted interest from private equity firms, including Apollo Global Management, the sources added.

Volkswagen, Apollo and Eurazeo, which currently owns close to 30% of Europcar, declined to comment.

When Volkswagen divested Europcar in 2006, it said it could be a mobility services provider without owning a short-term vehicle hire company. A new deal for Europcar would allow Volkswagen to buy it back at a significant discount to the €3.32bn it sold it for 14 years ago.

Europcar is hoping to avoid the fate of U.S. peer Hertz Global Holdings, which filed for bankruptcy protection in May.

Last month, Europcar said it secured a €307m financing package to manage through the coronavirus crisis, which included a €220m loan guaranteed at 90% by the French state.

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