Shares of Hertz Global (HTZ) have popped this morning after the company took steps to protect itself from those pesky activist investors.
Bloomberg Unlike other companies that have been targeted by activists–we’re looking at you Abercrombie & Fitch (ANF)–this has been a very good year for Hertz Global and its competitor Avis Budget Group (CAR). Hertz is up 73%, while Avis has more than doubled. So MKM Partners’ Christopher Agnew and Bradford Dalinka can see the logic in the “poison pill:”
In general we are not fans of shareholder rights plans, however, we understand HTZ’s Board wanting to implement this plan: (1) It is a standard short-term (one-year) plan and therefore relatively shareholder friendly. (2) 2014, in our view, will be a big year for car rental and HTZ in particular with a stronger economy compounding the benefits of industry consolidation as HTZ fully integrates Dollar Thrifty. We also anticipate the likely strategic action of a HERC spin-off or sale which in turn we believe will be a catalyst for initiating and accelerating returning cash to shareholders. We can understand why the Board would like time to execute on the strategic plan it has outlined. (3) We think this news will attract increased interest in the HTZ story with the risk that it also could increase volatility.
Shares of Hertz Global have gained 8.1% to $28.02 today at 11:06 a.m., while Avis Budget Group has risen 2.4% to $40.44.
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