NEW YORK (AP) — Hertz plans to spin off its equipment rental business into a separate publicly traded company.
The car rental company said Tuesday that it will receive about $2.5 billion in net proceeds as part of the transaction and plans to use it to pay down debt and to support a new $1 billion stock buyback.
Hertz also reported adjusted earnings for the fourth quarter that missed analysts' expectations. Its forecast for 2014 adjusted earnings was also below Street expectations.
Its shares edged up in afternoon trading Tuesday.
The Hertz Equipment Rental business rents equipment such as air compressors and tools, earthmoving equipment and power generators, forklifts and material handling, pumps, and trucks and trailers. It also sells new and used equipment and its Hertz Entertainment Services unit rents lighting and related aerial products used mostly by the U.S. entertainment industry.
Hertz Equipment Rental has approximately 335 branches in the U.S., Canada, France, Spain, China, Saudi Arabia and through international franchisees. It had more than $1.5 billion in revenue in 2013.
The spinoff will leave Hertz with the Hertz, Dollar, Thrifty and Firefly rental car businesses and Donlen, which provides fleet leasing and management services. The Park Ridge, N.J.-based company has about 11,555 rental locations in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Last year the rental car and fleet leasing business had $9.23 billion in revenue.
Its board has approved the separation plans. Mark Frissora will remain Chairman and CEO of Hertz. The equipment rental company will determine its management and board as separation plans are finalized.