PARSIPPANY, N.J. — Avis Budget Group, Inc. announced today that it has acquired a significant interest in Carey International Inc. In connection with this transaction, Avis Budget Group invested approximately $60 million in cash and now owns approximately 45% of Carey's common stock. In addition, Avis Budget also obtained a one-year option to increase its ownership stake in Carey to approximately 80%, subject to certain conditions, which would likely include the assumption or repayment of Carey's existing indebtedness.
Carey International, with approximately $250 million in revenue in 2006, is the market share leader in the approximately $5 billion chauffeured ground transportation category. Carey offers its customers consistently superior premium service through the industry's only franchise system. Carey operates in 550 cities and 60 countries through its network of franchisees and alliance partners.
"With this investment, Avis Budget Group expects to be able to offer corporate customers and travel partners the most complete portfolio of local ground transportation products and services available anywhere," said Avis Budget Group Chairman and Chief Executive Officer Ronald L. Nelson. "As the world's premier chauffeured services brand, Carey provides premium-quality services across a broad geographic footprint, making it an ideal partner for Avis Budget."
Carey International will continue to be led by its existing management team, including President and Chief Executive Officer Gary L. Kessler and Executive Vice President and Chief Financial Officer Mitchell J. Lahr, based out of Carey's offices in Washington, D.C. Carey's existing investor group, led by Chartwell Investments, continues to hold a majority ownership position.
"We are tremendously excited about our new relationship with Avis Budget Group," Kessler said. "The opportunities for us to leverage Avis Budget's strong customer relationships, technological capabilities and vehicle services expertise will allow us to enhance service delivery to our clients and strengthen our position as the leader in the chauffeured transportation industry."
Although Avis Budget has an option to acquire a controlling interest in Carey, until that time, Carey will remain an independent company and its existing investor group, led by Chartwell Investments and Ford Motor Company, will continue to hold a majority ownership position.
“Over time, we may implement changes to grow our respective companies, share best practices and enhance our combined value proposition to our customer base. In the meantime, I know I speak for the entire Carey family when I welcome Avis Budget and express my eagerness to work with them,” said Kessler.
The move should strengthen Avis Budget's position in the corporate travel market because of the additional ground transportation services it can offer, said consultant Neil Abrams, president of the Purchase, N.Y.-based Abrams Consulting Group.
"This gives Avis Budget significant leverage in the corporate sector," Abrams said. "Now, they can offer a multitude of services. If car rental doesn't work for a client in an area, they have alternate transportation capability. They can customize a corporate travel program, so you have the Avis, Budget and Carey brands. The more they can do beyond their core, the better it is for them."
Though this is Avis Budget's most significant foray into chauffeured car services, it's not the company's first. In June 2007, Avis Rent A Car launched a chauffeured driver service to its loyalty program members in 10 top U.S. business destinations, supplying drivers at hourly rates for rented cars, a move that led to some speculation that closer ties between the two industries soon would follow.
SOURCE: PR Newswire, Carey International, and BTN