Avis Europe Share Discussion Threads

[matthu] 12/2/2005 18:56

Avis are currently conducting a strategic overview of their options going forward. In the meantime they need to ensure adequate working capital until the outcome of this review starts paying dividends (literally!)

Could Avis be contemplating the issue of covertible bonds? The conversion price of such bonds may be determined (formulaicly somehow) by the average price over some period prior to the offer being made. I can then see share holders trying to manipulate prices up and prospective bond holders (in due course) trying to manipulate prices down ...

[gerry321] 12/2/2005 17:32

matthu
You could well be right and there is a determined effort by potential underwriters to concentrate ave ownership even further and coincidently get the value of the business up ahead of a restructuring announcement
This would certainly minimise the risk of a large no of small shareholders turning down any future capital restrucuring proposition ....although there is already 70% ownership in the hands of 3 groups...more than enough to swing a restructuring vote at an egm

An injection of new capital would obviously help ave ...but what would they spend it on ??
In essence this would be an appeal to to the non D`Ieteren owners to inject capital into D`Ieteren
and
By going down the public route D`Ieteren would be declaring that they were unwilling to find the money internally
In any event
From a credibility standpoint a restructuring program would have to be accompanied by something more radical on the cost cutting and marketing fronts
And
Under previous ave mgt, meaningful cost cutting by removing people was considered so difficult that the "better" option adopted was to invest a fortune in an abortive ERP system


I remember a motor mechanic friend of mine saying repeatedly in the pub to people who thought they knew something about cars

When you have a problem with a car that won`t start it is almost always the obvious thing that has gone wrong
eg Its not tiny grains of sand in your carburettor because your fuel tank was running low yesterday .........

Clean and reset your contact points
this will fix it 9 times out of 10

Likewise I`m drawing the obvious conclusion here

I`ve a strong feeling ave is about to be sold ..all the signs are there of a major effort by a few Big Buyers to corner the free market in ave shares
Either
These Jan Big Buyers are mostly the Dec Big Sellers who have now had a 180 degree turnaround in their attitude to ave stock since mid Dec
Or
These Jan Big Buyers are mostly different people who have been lined up to cooperate in a "legal" exercise to acquire stock ahead of an announcement
( which is what I believe )

Given that their starting point was availabiity of under 30% of the equity at around 50p there was always (and continues to be) the prospect of the price soaring up to or even beyond any prospective bid level before the little people put the last 10 to 15% of the stock on the dealing table
The tell tale giveaway is the declaration by Fidelity on 18 Jan that they had
increased their ave holding by 12.5%
Does it make sense to do this ahead of a capital restructuring announcement ?
What is not in doubt is that there is clearly a concerted effort to acquire as many biggish parcels of stock as possible without forcing the MMs to up the price substantially
This can only be done by working closely with the MMs who are no doubt in regular contact with the Big Buyers as they separately accumulate biggish
chunks of stock

We won`t have long to wait now............

[matthu] 12/2/2005 05:34

I'm afraid I don't buy talk of Hertz being interested in taking Avis over. For one thing, I cannot contemplate any such deal getting past competition law.

Every indication continues to suggest to me that D'Ieteren are happy to maintain their investment in Avis. At the time of the pre-close update, the Board indicated that it intended to take steps to address the distributable reserves position in due course, which to me sounds like a capital restructuring program in the offing rather than anything else?

If that is the case, then one should presumably try to explain unusual share price activity in the next few months as manipulation by the underwriters in the lead-up to any restructuring.

[gerry321] 11/2/2005 23:28

Snap
the rumours about Hertz and Cendant going after AVE may both be true


Why ?

Hertz ..
1. Because they think buying AVE could generate significant cost savings and help improve margins by having complementary rather than competitive pricing strategies
2 . Because they have investigated EC competition law and reckon they can buy AVE legally despite anti competition rules ...........and
3 Because they have investigated EC company law and reckon Cendant cannot enforce withdrawal of the AVIS brand licence under EC law if AVE is sold to Hertz
Cendant
1 Because they can`t work with Hertz as a competitor in the US and as a partner outside the US ...getting access to Avis strategies for Europe founded on Avis strategies in the US
2 Because it pre empts the strategic option of some day buying Ave and having a truly global brand
Also
You have to remember that the terms of the original float off of AVE from Avis Inc and the granting of the brand licence were written way back in 1986
At that time Avis Inc was bought by an investment co who sold it to its employees who then in turn floated AVE off on the LSE
I wouldnt be a bit surprised if this licence was sloppily written
See below

Avis Inc

1986 – The investment firm, Kohlberg, Kravis, Roberts & Co. buys Beatrice for $6.2 billion; says it will sell Avis.( Avis Inc ) Wesray Capital Corporation, another investment firm, acquires Avis for $263 million plus the assumption of debt. Shares of Avis Europe are listed on the London Stock Exchange.

1987 – Avis' Employee Stock Ownership Plan (ESOP) purchases Avis(Avis Inc) for $750 million, plus the assumption of debt. Avis is considered a model ESOP company and is one of the largest employee-owned companies in the United States.

-------------------------------------------------------------------------------
Avis Europe

1986
Separates legally from its former owner, Avis Inc., whilst still remaining part of the Avis worldwide system. Avis Europe becomes the first car rental company in history to successfully float on the London Stock Exchange. In 3 years as a public company, Avis Europe triples its market value.


Avis Group (ie Avis Europe) enjoys close commercial ties with Cendant Corporation in the US, which owns the global rights to the Avis and Budget brands, including sharing technology and marketing initiatives. The companies actively cooperate to provide a worldwide seamless service and form one of the largest vehicle rental networks in the world. They are independently owned.

[snaptastic] 11/2/2005 20:11

Gerry,

you may be onto something there. very strong closing auction bodes well for monday... hopefully some press coverage..

Have a gut feeling next week may be very bullish for AVE... charts suggests so...


from uk analyst.
M&A speculation continued to support the mid caps, with Avis Europe (up 1p to 63p),

[gerry321] 11/2/2005 20:08

Looking back on todays trades.......Fri 11 Feb 05
and
If above theory is correct (Post 171)
Mon Feb 14 05 will see minimum of around 2.5m to 3.5m of ave shares change hands in parcels of 20000 or greater
at around 63-63.75p per deal
with the share price of each reported deal
not
reflecting the sort of leap

a "buy" (or "sell" if thats how they choose to report it)

of this size ought to have generated

.........And coupled with the 1.3m shares picked up by the big boys today.....

..The ave free market will have shrunk further to around 101m to 106m as big boy shares temporarily go out of circulation pending the announcement

[gerry321] 11/2/2005 15:12

Looking at todays trades up to 3pm
Isnt it strange that
As soon as 400000 to 700,000 worth of little deals have been made we get a big deal of 160000 to 250,000 shares
If you believed in conspiracy theories

This could be due to MMs buying up small parcels of stock from the little people to immediately fulfill prior orders for large parcels from the big boys at an agreed price slightly higher than the MMs paid for them

Quite a smart move if you want to keep the price down

But
indicative of an emerging shortage in stock

We little people need to stick together
Don`t let them away with it,,, hold out for more !!!

[365] 11/2/2005 14:20

creeping up daily, all very bullish.

[365] 11/2/2005 07:51

Gerry321 > Music to my ears!

[gerry321] 10/2/2005 17:43

Anothe 9m shares in big parcels (200,000+) disappeared today into the hands of the big boys
Less than 4% of the deals accounted for 90% of the volume


There can`t be much more than 105m - 110m ave shares left in the free market ie around 18% of the entire AVE co
with a bit of luck these big parcels will dry up over the next few trading days
leaving the little men ( us ! ) to get the benefit of the final price jump pre any announcement
given a bid price of around 90p the big boys ought to be willing to keep buying
up to around 80p pre any announcement
Heres hoping

[365] 10/2/2005 11:53

LOL!!

Surprised more are not in these?

[gerry321] 10/2/2005 11:53

Thanks targatarga

Been trying to figure out why Fidelity / Templeton are`n`t reporting increased AVE stock when their current holding already gives them access to inside info and hence the truth underlying all the bid rumours

Given the high price they paid for their current stock ( over 80p ) they ought to be hoovering up all they can to maximise their gain

Could be that........
Since any reported uptake in their holdings would send the market wild
And
.....assuming obviously that there is a going to be a piece of really good news shortly
the only conclusion you can draw is that Fidelity / Templeton have in place ongoing deals to fund purchases thru several 3rd Parties .....
who don`t need to declare their holding until they have each acquired around 17m shares ie 3% of the business
With not more than 120m shares now available in the free market this seems the obvious way of maximising their return at minimum cost It also suggest that when the good news does come it will be in a situation when there is an extreme scarcity of stock..........

[pineapple1] 10/2/2005 11:25

L2 very strong.

[targatarga] 10/2/2005 11:20

GERRY321 - its when you mess your pants everytime your stock multiplies. regards

[gerry321] 10/2/2005 11:16

Whats a multi bagger ?
TTL ?
MDY ?

[365] 10/2/2005 09:24

holding my IG long from 56p see what happens, all good fun anyway.

(TTL) looks like its shaping up to be a multi bagger this year, (MDY) bottoming out too

[snaptastic] 09/2/2005 23:50

MARKET TALK: Avis Europe Up; Talk Turns To Hertz - Trader
1051 GMT [Dow Jones] Avis Europe (AVE.LN) +4.4% at 59p as speculation turns to possible tie-up with Hertz, says trader. Says "Hertz is looking to consolidate, good cost savings." An analyst dismisses speculation, says savings would be achievable but notes there "would be problems with the Avis brand rights" as these are owned by Cendant (CD), who own Avis Inc, the biggest competitor to Hertz in the US. Adds, "Looks like a share price in search of a story to me." Avis Europe declines to comment. Hertz not available to comment. (PAB)

[robcal] 09/2/2005 17:06

Naivety always was my strong point.
If you own 60% of a company that is heavily indebted and obvously needs its business model rethinking, why tie up more money by buying the remaining shares because you can already do what you want.
Cut costs absolutely, pay no divis, hold out little hope for anything in the near future and watch the shares drift down until they are almost worthless. As long as you can service the debt and keep the cash flowing whose bothered about profits until it is sorted.

[gerry321] 09/2/2005 15:56

Wouldn`t be surprised if AVE hover at 59-62p for a while before jumping pre an announcement on 27 Feb

...Hope not

.....But

.........this was the level at which there was panic in the market and the price collapsed pre xmas

Some of those who bought sizeable parcels then will be happy to recoup their losses and sell to the big boys.. at this level

as will some of those now sitting on 20% + gain

NB If the big buyers are in cahoots then they will not drive up the market price by competing over sizeable parcels but attempt to negotiate discreetly with each other on who buys from who...I assume this is legal ..??

There must be at least 3 or 4 of these Big Boys chasing the last 20% of

shares remaining in the free market

If they currently own around 2% they can buy another 1% each without going public ...Thats 16-18m shares which need to be bought in two weeks if the bid theory is correct
The price is unlikely to spiral until all the sizeable parcels are mopped up

Heres hoping

[rawly] 09/2/2005 12:47

Anyone can happily have my holding at 90p

[snaptastic] 09/2/2005 12:10

90p will make me a very very happy man :)

[entj] 09/2/2005 11:28

I agree that there is large upside here.
Resistance around 90p. I plan to sell if it reaches 88p

[gerry321] 09/2/2005 11:16

snap

The $64000 question

What will be the Cendant bid price ?

Some Clues

Fidelity paid an average of 80-85p for their 41m shares

Templeton paid an average of 80p for their 29m shares

D`leteren paid an average of 90-95p for their 350m shares

...........hostile bid impossible

thus
A deal which gives D`leteren their money back + other benefits/deals/contracts

associated with Cendants global reach makes most sense


90 - 95p sounds about right

[snaptastic] 09/2/2005 09:14

up we go again... looks strong too....

[snaptastic] 08/2/2005 07:16

Market Report: Belgian car seller sparks interest in Avis Europe
Michael Jivkov
08 February 2005


Bulls were firmly in control of London stocks yesterday as merger and acquisition speculation reached fear pitch in the Square Mile. The FTSE 100 roared 38.3 points higher to 4,979.8 while the FTSE 250 rose 25.5 to a fresh high of 7,320.9 as traders hunted the market for the next company to be involved in some form of corporate action.

The bulk of the excitement focused on Avis Europe, up an impressive 10 per cent, or 5.5p to 58.5p, on hopes the car rental giant is about to be bought by a larger player. Dealers talked of two possible scenarios which would see Avis lose its independence. The most popular story suggested that the car hire group's biggest shareholder, the Belgian car seller D'leteren, could move to buy out minority shareholders. The company controls 60 per cent of Avis.

The South African industrial group, Barloworld, was also bandied around as a possible predator. Although Barloworld has indicated that it would be interested to expand into Europe it was unclear yesterday exactly why it would want to do so via the acquisition of a car rental company. Analysts were sceptical that such a scenario would come to pass, arguing that D'leteren is unlikely to want to sell its holding in Avis at present levels.