Avis Europe plc Acquisition of 3 Arrows Ltd
11 December 1998
Avis Europe plc Acquisition of 3 Arrows Ltd
BRACKNELL, Berkshire--Dec. 10, 1998--Avis Europe plc, the leading car rental company in Europe, Africa, the Middle East and Asia, today announced the acquisition of the entire issued share capital of 3 Arrows Ltd, one of the UK's leading companies in the credit hire and non-fault claims management business. The acquisition is for a total consideration of (pound)40.0 million, of which (pound)34.8 million has been satisfied by the issue of guaranteed loan notes and the balance in cash and unsecured loan notes.
Founded by Chris Norman in 1983, 3 Arrows pioneered the credit hire business in the UK and currently operates an average fleet of 1,500 vehicles and employs 175 people. Its profits are derived principally from providing car rental to motorists involved in a non-fault accident while their own vehicle is being repaired, the cost of the car rental being recovered by 3 Arrows direct from the insurers of the party at fault. The credit hire industry has grown strongly in recent years but still handles only approximately 14% of the estimated 1.3 million non-fault road accidents in the UK every year. Avis Europe therefore believes that the prospects for further market penetration are very encouraging.
As at August 1, 1998, 3 Arrows Ltd had net assets of (pound)12.4 million with attributable profits after tax of (pound)2.7 million ((pound)4.4 million before tax and exceptional items). Avis Europe expects this acquisition to be earnings enhancing in the first year of operation.
Avis Europe has grown its overall replacement car business over the last year by more than 20% and has been actively seeking opportunities to further expand in this important segment. The 3 Arrows business, based in Manchester, is concentrated on the higher margin retail side of the market and extends Avis Europe's involvement in this growth area. 3 Arrows will continue to operate its claims management business under its established trading name, while benefiting from the financial standing of the Avis Europe group and its leadership in car rental technology and fleet logistics.
Chris Norman will remain as an executive Director of 3 Arrows Ltd, providing business continuity and industry expertise to assist in exploiting the significant growth opportunities which exist in the UK. Chris Norman will report to David Maloney, Corporate Development Director and Board member of Avis Europe plc, who will work with Chris to pursue these opportunities. David Maloney and Mark McCafferty, Group Managing Director of Avis Europe plc, join the board of 3 Arrows Ltd.
Commenting on the acquisition, Chris Norman, Managing Director, 3 Arrows Ltd, said: "I believe that joining Avis Europe is a very positive step in accelerating 3 Arrows' penetration in the credit hire marketplace and we very much look forward to working with the Avis team."
Mark McCafferty, Group Managing Director, Avis Europe plc, said: "We are delighted to announce this acquisition which represents an excellent opportunity for us to extend our involvement in the replacement car business. Credit hire is a fast growing niche of the overall replacement car market, targeted as a strategic development area for Avis Europe at its flotation in April 1997. We are pleased that Chris Norman and his team will continue to work with us in maximizing the growth potential."
Avis Europe plc was advised by BT Alex Brown and 3 Arrows Ltd was advised by Grant Thornton Corporate Finance.
Avis Europe plc rents cars under the Avis brand name to customers in 110 countries. Avis Europe's ordinary shares trade on the London Stock Exchange. Prices may be accessed on Bloomberg under the symbol AVE LN and Reuter Equities 3000 Service under AVE.L. Additional information is available on Avis Europe's internet site: www.avis-europe.com.