Europcar Group to buy out its Irish franchisee in new strategy

Cost of purchasing Europcar Ireland will be in the tens of millions of euro, sources say

Europcar is buying out its Irish franchisee as the vehicle rental group pushes further into car sharing and seeks to increase the number of businesses it directly owns and operates.

Europe’s largest car hiring company announced on Tuesday that it is buying Europcar Ireland, which owns the country’s largest car-sharing programme, GoCar, for a sum in the tens of millions of euro, according to several people with knowledge of the deal.

The Irish operation has been owned by Ormen Group, set up in 2004 and whose main backer is Colm Menton, the chief executive at Europcar Ireland.

The group’s other directors include Stephen Gleeson and Eugene O’Reilly, managing director and executive chairman respectively at Hyundai Cars Ireland. Mr O’Reilly is the other main shareholder of Ormen Group through a firm called Ditton Investments. Mr Menton said he will remain in Europcar.


Europcar Ireland has 19 locations and owns about 95,000 vehicles. Its car sharing service GoCar has some 150 vehicles in operation.

The most recent accounts for the Ormen Group showed an operating profit of €6 million on turnover of €45 million for the year ended August 31st, 2015.


Europcar is looking to spend up to €500 million on future acquisitions to buy other franchised companies, car-sharing service providers or local rivals in its existing markets, said one person familiar with its strategy. That person said the strategy is intended to bolster the group against changes sweeping the industry.

The move would take Europcar further into the realm of transport services, which has attracted on-demand ride-hailing groups such as Uber, as well as carmakers looking to develop alternative revenues streams.

Car rental companies are under pressure because the resale value of their vehicles is falling and demand for their services is shifting. US group Hertz warned last month that profits for 2016 would be lower than expected, an announcement that caused its shares to lose up to half their value in a day.

Europcar owns car sharing programmes in Paris, Berlin, Brussels, Madrid and London, and plans to open new centres in the coming weeks.

Falling share price

Europcar’s shares, which were listed last June in Paris, have fallen by 21 per cent since the flotation, though they have risen since last month, when chief executive Philippe Germond was replaced by Caroline Parot, his former deputy.

Europcar plans to fund its future purchases through debt, and has the capacity to raise about €500 million based on its current profitability, one person said. It has debt equal to 0.6 times earnings before interest taxes, depreciation and amortisation. The person said the company could end up with total leverage of 2.5 times ebitda.

Europcar last year reported €251 million in core earnings on revenues of €2.1 billion.

While the Europcar brand operates in some 100 markets, the company only owns the operations in nine countries including the UK, France, Germany and Spain, with the rest franchised out. The group has not set a target for how many of its franchised operations it wants to buy.

– Copyright The Financial Times Limited 2016