Hertz could Sell Equipment Rental to Defeat Takeover Attempt

Hertz Equipment Rental Co. (HERC) could be sold as parent Hertz works to prevent hostile takeover. 

Hertz share prices jumped in New Year’s eve trading when the company announced it had instituted a one-year shareholder-rights plan -- also known in stock-watchers' parlance as a “poison pill” -- to prevent anyone from accumulating more than 10 percent ownership in the company. A poison pill is designed to dilute the value of the stock by flooding the market with additional shares, making it expensive for an investor to acquire a controlling stake in the company through the open market without negotiating with the company's board.

Dan Loeb’s activist hedge fund Third Point recently raised its stake in Hertz to near 5 percent. The largest Hertz shareholder is Wellington Management Co., which owns more than 9 percent of Hertz common stock.

Investors have pressed Hertz on the idea of separating from the equipment rental business for several years, and the Financial Times reports analysts say the issue would likely be among activist’s demands for change at the company.

Equipment rental accounted for $1.1 billion of the Hertz' $8.2 billion of revenue in the first nine months of 2013, and $207 million of its $1.3 billion in adjusted pre-tax profit.

(more on Hertz' defense against activist investors . . . )