Volkswagen Is Said to Explore Offer for Europcar
While Europcar has drawn interest from other suitors, finding a buyer during the Covid-19 slump could be difficult, sources said.
(Bloomberg) -- Volkswagen AG is exploring an offer for Europcar Mobility Group, according to people familiar with the matter. Shares of the rental-car company soared.
Volkswagen’s considerations are at an early stage, said the people, who asked to not be identified because the matter isn’t public. The carmaker could opt to not proceed with an offer, they said. Europcar shares rose as much as 17% in trading on Wednesday in Paris.
While Europcar has drawn interest from other suitors, finding a buyer during the Covid-19 travel slump could be difficult, the people said. Europcar hired advisers last year and set up a committee to weigh next steps after its largest shareholder, Eurazeo SE, warned of a potential exit from the car-rental agency and private-equity suitors began circling the firm.
VW is considering a deal to expand its mobility services offerings, including rental and leasing programs for new and used electric cars, the people said. Europcar would give VW access to additional sales channels for its emerging electric fleet, especially as it’s unclear how the value of these vehicles develops after they’ve been in use for a few years.
VW has in the past successfully shifted diesel models to markets in Eastern Europe via its financial services division after customers in western countries shunned them at the height of the diesel-cheating scandal.
Europcar said in a regulatory statement that it “would actively continue its efforts to streamline” its cost base.
“The company has started to work on this adaptation and, among the various possible options, may entertain contacts,” the statement said.
Representatives for Eurazeo and Volkswagen declined to comment.
Snapping up Europcar would mean competing with the likes of Sixt SE, which is offering anything from traditional rental services to car- and ride-sharing as well as an app-based car subscription model.
If VW pursued a takeover, it would mark a reversal after the company sold Europcar to Eurazeo in 2006 for 1.26 billion euros ($1.4 billion). It now has a market value of about 420 million euros.
Travel restrictions tied to the coronavirus pandemic have also upended the car-rental industry, with Hertz Global Holdings Inc. filing for bankruptcy in May.
“A possible Volkswagen acquisition of Europcar Mobility, which purchases its rental fleet from the automaker, would be more of a distraction during this period of unprecedented operating challenges than a meaningful credit risk, given the manufacturer’s size,” Bloomberg Intelligence credit analyst Joel Levington said in a research note.
Private equity firms such as Apollo Global Management Inc. had been interested Europcar last year, Bloomberg News previously reported.
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