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HTZ: Hertz to Spin Off Construction Rental Business

Activist investors have been pressing HTZ to separate the unit


HertzLogoSources tell the Financial Times that Hertz (HTZ) is planning to separate its construction equipment rental business. The news sent HTZ stock up more than 5% in Monday morning trading.

According to the report, HTZ is considering a possible “Reverse Morris Trust,” under which HTZ would first spin off the construction equipment rental unit to HTZ shareholders and then merge it with another company. Such a deal would be tax-free if it the HTZ subsidiary is considered the buyer of the company with which it merges.

HTZ Stock: Why Hertz Is Trading Lower Today
HTZ Stock: Why Hertz Is Trading Lower Today

Hertz is said to be communicating with possible targets for a post-spin off merger.

During the first nine months of 2013, the equipment rental unit generated $1.1 billion in revenue. Other HTZ units reported revenue of $7.1 billion during the same period. The equipment rental business accounted for $207 million in earnings during that time.

Activist investors have been pressuring HTZ to separate the equipment rental business for some time, believing that it is a drag on the valuation of Hertz.

Over the past year, Hertz stock has climbed more than 20%.

Article printed from InvestorPlace Media,

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