GEOFF PERCIVAL: Rental firm Europcar fetches €26m

The Irish franchisee of car and van rental firm Europcar has been acquired by its parent group for an estimated €26m. Since its Paris flotation last year the French rental group has targeted the purchase of its better-performing franchisees with a reported war-chest of around €500m available.

The company is active in 10 countries across Europe.

With estimated revenues of €50m, Europcar Ireland is viewed as one of the group’s leading franchised operations.

The main beneficiaries of the sale are Colm Menton and Eugene O’Reilly, the two main shareholders in Europcar Ireland, which was advised by Investec on the deal.

Mr Menton will stay in his role of chief executive and Europcar Group chief Caroline Parot yesterday expressed confidence that Mr Menton and his management team can drive the Irish division’s growth.

“This is also a great opportunity for us to strengthen our leadership in our core European market. We are particularly pleased as this is not only the second major franchisee acquisition we’ve announced since our IPO but also a promising investment into new mobility services,” she said.

Europcar Ireland also owns the country’s largest car-sharing programme GoCar. That part of the business is expected to be nationwide by the end of the year.

Mr Menton said the new ownership arrangement will offer Europcar Ireland “a strong competitive advantage to continue our growth in Ireland and increase our market share”, saying that the move heralds the company’s next chapter of growth and development.

In a broker note, Deutsche Bank yesterday heralded the deal as “a good idea”, putting an estimated purchase price of €26m on the deal and saying it should be “materially value-enhancing”.

“We believe this [Europcar Ireland] is a high-performing franchisee, and for the purposes of our modelling use an assumption of earnings before interest, tax, depreciation, and amortisation, margins close to 13%.

"We would expect synergies — procurement, centralised back office, better yield management system — of a least 1-3 percentage points to drive this margin higher still, and with little incremental cost of achievement,” Deutsche said.

“Even if there are working capital requirements and costs to realising synergies, we would expect this deal to be materially value-enhancing,” it said.

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