Volkswagen AG is in talks to acquire French car rental firm Europcar Mobility Group in a deal that would allow VW to better capitalise on its fleet, Reuters sources said.
The report said any acquisition would come as Europcar struggles to cope with the economic fallout of the COVID-19 pandemic which has affected travel worldwide and all but evaporated demand for car rentals [Hertz filed for Chapter 11 bankruptcy in the US – ed].
Reuters noted any Europcar buy would be a reversal for VW which sold Europcar to investment firm Eurazeo SE in 2006.
Volkswagen has approached Europcar to express interest in an acquisition and carry out due diligence, a Reuters source said.
The talks are preliminary and a deal is far from certain given the financial toll of the coronavirus outbreak on Europcar, the news agency’s sources added.
Europcar has market capitalisation of EUR390m (US$441m) and net debt as of the end of March of about EUR1bn and has also attracted interest from private equity firms, including Apollo Global Management, the sources added.
Volkswagen, Apollo and Eurazeo, which currently owns almost 30% of Europcar, declined to comment to Reuters.
Reuters noted that, when VW divested Europcar in 2006, it said it could be a mobility services provider without owning a short term vehicle hire company.
A new deal for Europcar would allow VW to buy it back at a significant discount to the EUR3.32bn it sold it for 14 years ago.
Europcar is hoping to avoid Hertz’s fate, the report said.
Reuters noted Europcar said last month it had secured a EUR307m finance package to manage through the coronavirus crisis which included a EUR220m loan guaranteed 90% by the French state.