Hertz Global Holdings Inc (NYSE: HTZ) announced on Monday that the board approved the planned separation of its car rental and equipment rental businesses, more than two years after initially announcement of the plan. The separation will take effect on June 30.
Hertz will be separated into two companies: Hertz Global Holdings and Herc Holdings (NYSE: HRI). The car rental company, which was named Hertz Rental Car Holding Company, will operate under its new corporate name called Hertz Global Holdings and will trade in New York Stock Exchange under the current ticker HTZ. The equipment rental business, which is currently operated by Larry Silber, will change its name to Herc Holdings Inc. Larry will become the chief executive of the new company and the new entity will also trade in New York Stock Exchange under the ticker HRI.
The rental car industry is facing challenges from the ride-hailing apps such as Lyft and Uber, which was popular nowadays and became a new competitor to the rental car business.
Hertz Global Holdings currently operates about 9,980 company-owned and franchised rental operations in around150 countries. While Herc Holdings, whose equipment-rental business had $1.7 billion of revenue in 2015 and served companies in construction, manufacturing, energy and other industries. In the statement, the company also said that Herc board consists of two former 3M Co. executives and two people associated with activist investor Carl Icahn, who increased his stake in Hertz in December.
The company also announced that shareholders of record as of June 22 will exchange for one share of Hertz Global Holdings for each 5 shares they have, and each current share of Hertz will represent one share of Herc Holdings after being adjusted for 1-for-15 reverse stock split.
"The creation of these two public companies enables each to focus on their respective core businesses, thereby increasing the opportunity for both to create optimal shareholder value," Hertz Global Holdings CEO John Tague said.
Hertz shares rose 6.47% to $10.70 in mid-day trading.