Irish operators of Europcar sell to French 'parent' in €26m deal
French car rental giant Europcar has bought its Irish franchise from local management in a deal reckoned to be worth around €26m.
The Irish franchisee is one of the Europe-wide chain's biggest in terms of revenue, but had been controlled by Irish investors including main investor and chief executive Colm Menton and Eugene O'Reilly, who is also the executive chairman at Hyundai Cars Ireland.
Mr Menton is expected to remain with the business following the sale. The Irish rental company has shifted from being largely reliant on tourism into corporate rentals and set up the car-sharing service Go Car, which is included in the sale.
In 2016, Europcar Ireland is expected to generate revenues of approximately €50m.
Buying the Irish business outright extends Europcar's direct network from nine to 10 countries, and boosts its presence in the emerging car-sharing market.
Europcar Ireland operates from 19 locations for both cars and vans, including all of the country's main airports, with an average fleet of around 5,000 vehicles.
GoCar was launched in 2012 and operates a fleet of around 150 cars and vans in Dublin and Cork, with plans to role the service out nationwide.
GoCar is used mainly for short journeys by members who pay a flat fee plus usage charges and pick up cars parked in locations around cities.
The companies declined to say how much the deal was worth, but analysts at Deutsche Bank estimated the value of the deal at €26m based on comparable transactions elsewhere.
"We are very excited to become part of the Europcar Group and believe this offers us a strong competitive advantage to continue our growth in Ireland and increase our market share," said Mr Menton.
"This will also be of tremendous benefit to our staff and today's announcement is testament to their hard work and dedication.
"We have huge admiration for what the Europcar Group has achieved and joining the global operation marks the next chapter of our growth and development."
The deal is the second of its kind since Europcar was listed on the Paris stock exchange in 2015.
Caroline Parot, ceo of Europcar Group, said: "We are delighted with this acquisition as it demonstrates our ability to accelerate and execute our planned acquisition program.
"We are confident that Colm Menton, who will remain in the company, and his management team, will further accelerate the growth of Europcar Ireland.
"This is also a great opportunity for us to strengthen our leadership in our core European market," she said.
In its statement, Europcar said that its Irish business should generate revenues of approximately €50m a year.
Deutsche Bank said it believes the Irish unit is "a high -performing franchisee, and for the purposes of our modelling use an assumption of EBITDA margins close to 13pc."
It said on the basis of greater saving as a result of joining the group structure, that earnings of €6.5m could rise to €7.5m after the deal.
On the downside, analysts noted the risk of a potential more competitive landscape, rising fleet costs and potential unexpected demand weakness in Europe as a result of Brexit, among the factors to watch.