Florida Company Acquires Alamo
<I>Fort Lauderdale, Fla. </I>- In a move that surprised some car rental industry observers, Republic Industries Inc., a company that has been aggressively expanding in the past year and a half under the maverick direction of chief executive H. Wayne Huizenga, has signed an agreement to purchase Alamo Rent A Car.
The deal, which is valued at $625 million, is expected to be finalized by the end of November. Michael Egan will continue as chairman of Alamo, and no management or staff changes are planned as a result of the purchase.
"Historically, we purchase companies with a strong management, and a management that will stay," said Republic spokesman J. Ronald Castell. "We like the strategic plan Alamo has for the travel business." Castell said the two firms, both of which are headquartered in Fort Lauderdale, "make an excellent fit" because of Alamo's tie-in with Republic's used-car business.
Changes Ahead?
The deal is the latest in a series of car rental company acquisitions, the most notable of which is HFS Inc.'s purchase of Avis Inc. But while the HFS purchase will have little impact on the day-to-day operations of Avis, which will remain an independent entity having a franchise agreement with HFS, such is not the case with Alamo in the Republic deal, according to Betsy Snyder, a director at Standard & Poor's who covers the car rental industry.
Because Republic is buying all of Alamo, making it a wholly owned subsidiary, assuming its debt and acquiring all its vehicles, this makes it a different animal from the Avis deal and could signify changes at Alamo, she said.
Since May 1995, when Huizenga-whose holdings include Blockbuster Video-invested $27 million in the company, Republic has rapidly expanded its solid-waste business and diversified into outdoor advertising, electronic security services and, with the acquisition of AutoNation USA, used-car superstores, the cornerstone of its future growth. With its fleet of 140,000 cars, Alamo, the nation's fourth-largest car rental company, will help speed up that growth by providing a ready supply of used cars to Republic's retail locations.
Neil Abrams, president of Neil Abrams and Associations, a car rental consultancy in Purchase, N.Y. , said the deal could benefit Alamo as well because it will have the knowledge that "there's an aftermarket for its fleet and hence a value that can be attached to vehicles when they're acquired from the manufacturers." As Alamo pursues other segments besides leisure-such as local markets, which traditionally use older cars-it might in turn obtain Republic's unsold cars for its fleet.