March 5, 1998

Budget to acquire rival Ryder truck company

By SANDY SHORE
AP Business Writer

DENVER (AP) -- Budget Group Inc. moved Wednesday to bolster its corner of the consumer truck-rental industry by announcing plans to acquire Ryder TRS Inc. and its fleet of yellow trucks in a cash-and-stock agreement worth about $265 million.

The merger, if finalized, would create the second largest truck and car renter in the United States, about half the size of No. 1 U-Haul, said Jay Alix, Ryder TRS chairman and managing partner of Questor Partners Fund LP, which owns Ryder TRS. Penske Rentals would be in third place.

Under the agreement, Ryder TRS will retain its name and Denver headquarters, operating as a subsidiary of Budget Group. No management or employee changes are expected.

Alix said the merged company would benefit from combined fleet maintenance and purchase programs and some administrative functions.

Budget Group, based in Daytona Beach, Fla., plans to add Ryder TRS to its newly established truck division, which already oversees Budget Truck Rental and Cruise America, a leading recreational vehicle rental and sales company that Budget recently acquired.

The agreement calls for Ryder shareholders to receive $125 million in cash and $120 million in stock and up to $20 million in additional payments. Budget Group will assume Ryder TRS debt of about $440 million.

Shareholders of Ryder TRS and the Budget Group board have approved the merger, which now is subject to federal regulatory approval. The deal is expected to close by July.

The proposed agreement ends a battle of bids that has lasted nearly two years between Questor and Budget Group chief executive Sandy Miller. He did not return two telephone messages seeking comment.

In October 1996, the Southfield, Mich.-based Questor beat out Miller's Team Rental Group Inc. to buy Ryder TRS from Ryder System Inc. for $575 million, including $125 million in equity.

Miller's company beat Questor to buy Budget Rent a Car last year.

Alix said they discussed the proposed merger for several months before deciding that "it made more sense for our company to become a part of his overall company."

Ryder TRS will have to change its name in 8 years to comply with its 1996 sale agreement. So, Alix said, they decided it would be better to assume the Budget Group established name than eventually take on an unknown.

Ryder trucks, a familiar site on America's highways, were thrust into the public spotlight when they were used in the terrorist bombings of the World Trade Center in 1993 and the Oklahoma City federal building in 1995.

Alix said the adverse publicity did not hurt revenues, but did generate consumer sympathy.

"The consumers clearly understood that the company was clearly not responsible for that," he said. "They felt sorry for the company. No one ever blamed the company."