Eurodollar takeover puts directors in line for pounds 12m
Tuesday 12 August 1997
The largest beneficiary will be chief executive Ian Mosley, who will net pounds 4m. Freddie Aldous, chairman, and Steve Westoby, finance director, will both realise pounds 3m from the deal while John Leigh, director of UK operations, will get pounds 2.7m.
The cash offer is struck at 190p a share which represents a 60 per cent premium to Friday's closing price. However, it is still well below the 220p pricing when the company came to the market three year ago.
Eurodollar was hit by two profit warnings in a matter of months at the end of 1995 caused by a sharp fall in the residual value of ex-rental vehicles. At one point the shares fell as low as 67p.
Ian Mosley said: "It would be nice if things had been different. But compared to the 67p of not long ago, this looks wonderful." The shares closed 69.5p higher yesterday at 188p.
The deal will make Eurodollar a more powerful force in the car rental sector which is increasingly becoming a global business with large corporate clients looking for world-wide deals with one operator.
Eurodollar is already the second-largest car rental group in the UK behind Avis. Hertz remains the world leader.
Republic Industries, based in Fort Lauderdale, Florida, said the acquisition of Eurodollar would enable it to expand in the UK and Europe. It hopes to expand Eurodollar's business overseas, particularly in the US, and also increase the volume of US customers renting cars in Britain.
The Eurodollar name is likely to be dropped though no decision has been taken on a new brand
It is likely that Republic will withdraw from Eurodollar's contract with the Dollar car rental operation in the US which has not proved satisfactory.
Republic Industries is the largest new vehicle retailer in the US but also has five car rental brands including Alamo, National Car Rental, Spirit and Snappy. Car rental accounts for around 30 per cent of the group's $2.4bn sales.
The group recorded a net loss of $59m last year but is capitalised at $9bn.
Eurodollar recorded profits of pounds 8.3m on sales of pounds 107m in the year to March. It has 110 branches in the UK which account for most of its business.
Geoff Corbett of Republic's car rental division said there would be no job losses and that the plans to grow the business meant new employment could be created. The Eurodollar board will be retained.
Eurodollar will pay an interim dividend of 2.5p per share subject to the offer becoming unconditional before 20 November.
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