Hertz Global Holdings Inc. (HTZ) will buy Advantage Rent A Car for $33 million, after the rental-car company's bid won out over another offer for the company.
Advantage, suffering along with the rest of the sector from the weak economy and tight credit, filed for Chapter 11 bankruptcy protection in December. The company, which posted 2008 revenue of $146 million, has 20 locations, down from 140 at its peak.
Hertz hasn't been immune from those issues, having swung to a big fourth-quarter loss on charges. Revenue also fell 16% to $1.78 billion in the quarter. Just this week, Standard & Poor's Ratings Services lowered Hertz's long-term corporate credit rating two notches deeper into junk.
The car-rental industry has suffered as everyone cuts back on travel. The weak economy and credit crunch also have made it harder for rental-car companies to find buyers for their used automobiles and to secure financing to buy new ones. The industry is lobbying Congress to allow car-rental companies to use Troubled Asset Relief Program funds to finance new auto purchases.
Still, Hertz gains a brand aimed at price-sensitive customers in U.S. leisure destinations, showing how the recession has made it easier for bigger, stronger players to pick up distressed competitors.
The bankruptcy court will hold a hearing Friday, with Hertz expecting a close next Wednesday.
Hertz shares were unchanged in after-hours trading. They ended the regular session up 7.4% at $4.22.
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