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FEBRUARY 2014 issue of
Rental Management

Hertz adopts shareholder rights plan

Activist shareholders could push to sell Hertz Equipment Rental

The board of directors for Hertz Global Holdings, Park Ridge, N.J., on Dec. 30 unanimously adopted a one-year shareholder rights plan. The company said it had observed unusual and substantial activity in the company’s shares and the rights plan is intended to ensure that the board remains in the best position to perform its fiduciary duties and to enable all Hertz shareholders to receive fair and equal treatment.

The company said the plan also is designed to allow all Hertz shareholders to realize the long-term value of their investment by reducing the likelihood that any person or group would gain control of Hertz through open market accumulation without appropriately compensating the company’s shareholders for such control or providing the board sufficient time to make informed judgments.

The move has generated much speculation concerning a possible sale or spin-off by Hertz of its subsidiary, Hertz Equipment Rental Corp., as analysts say some activist investors might be looking for Hertz to divest the equipment rental business to free up cash and improve cash flow, which could, in turn, increase shareholder value.

Lois Boys, group president, Hertz Equipment Rental Corp., would not comment on any speculation, but she did speak with Rental Management prior to the parent company’s adoption of the shareholder rights plan about her outlook for the equipment rental company’s future and more in an exclusive interview starting on page 98.

Hertz’s board and management team said they are focused on enhancing shareholder value. The board said it believes the rights plan will preserve the company’s ability to continue implementing its strategic initiatives to drive improved returns and value creation.

These initiatives include the integration of Dollar Thrifty, expanding Hertz’s off-airport footprint, the introduction of new brands to meet consumer needs, building on the company’s success with Donlen leasing, the roll-out of new rental technology, the company’s lean cost management programs, and the evaluation of potential changes to the company’s operating structure and capital allocation to further support the company’s long-term strategy.

While it is the company’s policy not to comment on specific discussions with shareholders, the company said it has had dialogue with a number of shareholders and welcomes their input towards the goal of enhancing shareholder value.

The rights plan, which was adopted following evaluation and consultation with the company’s outside advisors, is similar to plans adopted by numerous publicly traded companies and was not adopted in response to any specific takeover bid or other proposal to acquire control of the company, Hertz said.

Hertz has engaged Bank of America-Merrill Lynch and Barclays as financial advisors, and Cravath, Swaine & Moore as legal counsel.




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