EXHIBIT (c)(5)
Confidential/Draft
Presentation to:
PROJECT ROUNDTRIP
October 17, 2000
LEHMAN BROTHERS
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CENDANT VERSUS FORD: COMPARATIVE OFFER PREMIUMS/DISCOUNTS
[Graph 1 A graph of comparative offer premiums showing Cendant's offer of $29
per Avis share is 14% above Avis' 52 week high stock price, 23% above Avis'
stock price one month prior to the offer and 117% above its 52 week low.]
[Graph 2 A graph of comparative offer premiums and discounts showing Ford's
offer of $30 per Hertz share is 41% below Hertz's 52 week high stock price, 6%
below Hertz's stock price one month prior to the offer and 24% above its 52 week
low.]
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AVIS FORWARD P/E RELATIVE TO HERTZ PRIOR TO CENDANT OFFER
[Line Graph showing price to forward earnings ("Forward P/E") showing Avis
relative to Hertz between 8/14/98 and 8/14/00 (one day prior to Cendant's
offer); Avis' Forward P/E relative to the Hertz Forward P/E ranged between a
high of 82% and a low of 48%, with a median of 65%.]
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FORD OFFER FOR HERTZ
o Morgan Stanley Dean Witter's analysis of going-private transactions used
in its opinion for Travelers Property Casualty Corp.(1) indicates that
the average price increase from initial offer to final offer for all
such transactions was 3.91%.(2)
<TABLE>
<CAPTION>
Hertz Implied Avis Price as a % of Hertz(3)
IBES P/E ------------------------------------
Price 2001E Multiple 48% 65% 82%
----- ----- -------- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Ford Offer $30.00 $3.44 8.7x $17.37 $23.52 $29.68
3.91% Increase $31.17 $3.44 9.1x $18.05 $24.44 $30.84
10.0% Increase $33.00 $3.44 9.6x $19.11 $25.88 $32.65
</TABLE>
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(1) Filed on March 23, 2000.
(2) For transactions where price data was available.
(3) Based on Avis management's 2001 earnings estimates of $4.15 per share.
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STOCK PRICE PERFORMANCE
[Bar Graph 1 showing stock price [Bar Graph 2 showing stock price
performance for the S&P 500, Avis performance for the S&P 500, Avis and a
and a peer group (1) between peer group (1) between 8/14/00 and
9/24/97 and 8/14/00; the S&P 500 10/16/00; the S&P 500 decreased 7%, Avis
increased 57%, Avis increased 50% (2) increased 14% and the peer group
and the peer group decreased 17%.] decreased 18%.]
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(1) PEER GROUP INCLUDES HERTZ, BUDGET, DOLLAR, AND ANC.
(2) USING AVIS BID PRICE OF $29.
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COMPARABLE COMPANY ANALYSIS*
<TABLE>
<CAPTION>
Peer Group
Median
Avis(1) Hertz(2) Budget(3) Dollar ANC(4) (excl. Avis)
------- -------- --------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Price $29.00 $30.00 $3.06 $18.50 $5.25 NM
% change vs. 52-Week +13.5%(6) -41.0%(7) -70.1% -23.1% -30.6% -35.8%
High(5)
% change vs. 52-Week +116.7% +23.7%(7) +0.2% +62.6% +16.7% +20.2%
Low(5)
Earnings Estimates:
LTM EPS $2.82 $3.32 $0.07 $2.98 -$1.30 NM
2000E EPS(8) 3.13 3.25 0.50 3.07 1.17 NM
2001E EPS(8) 4.00 3.44 0.68 3.30 1.57 NM
Price/Earnings:
LTM EPS 10.3x 9.0x NM 6.2x NM 7.6x
2000E EPS(8) 9.3x 9.2x 6.1x 6.0x 4.5x 6.1x
2001E EPS(8) 7.3x 8.7x 4.5x 5.6x 3.3x 5.1x
Firm Value(9) /LTM Revenue 2.06x 2.17x 1.78x 2.22x 1.54x 1.97x
</TABLE>
* All information at or for the last twelve months ended 6/30/00 unless
otherwise noted. Market prices as of 10/16/00.
(1) Avis information prior to Cendant offer on 8/14/00; offer price of $29 used
for calculations.
(2) Hertz information prior to Ford offer on 9/20/00; offer price of $30 used
for calculations.
(3) Excludes one-time restructuring charge of $105.4 million.
(4) Excludes one-time pre-tax restructuring charges of $40.5 million for the
4th quarter of 1999 and $5.5 million for the first 2 quarters of 2000.
(5) 52-Week High/Low as of 10/16/00 unless otherwise noted.
(6) 52-Week High/Low as of 8/14/00.
(7) 52-Week High/Low as of 9/20/00.
(8) IBES median estimates.
(9) Calculated as market capitalization plus total debt, minority interest and
preferred equity less cash.
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AVIS EARNINGS - SENSITIVITY TO T&M INFLATION
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
2000 2001 2002 2003 2004 CAGR(2)
------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
IBES Estimates (1) $3.13 $4.00 $4.66 $5.43 $6.32 19.2%
------ ------ ------ ------ ------ -------
Avis Management Estimates $3.23 $4.15 $4.83 $5.58 $6.48 19.0%
Impact of 100 bps Reduction in T&M Inflation (5) - (0.48) (1.00) (1.57) (2.20) N/A
------ ------ ------ ------ ------ -------
Adjusted Avis Earnings $3.23 $3.67 $3.83 $4.01 $4.28 7.3%
Implied Future Per Share Values (3)
---------------------------------------------------------
Terminal 7.0x $22.61 $25.71 $26.81 $28.07 $29.97
Values 8.0x $25.84 $29.38 $30.64 $32.08 $34.25
9.0x $29.07 $33.05 $34.47 $36.09 $38.54
Present Value of Implied Future Price/Share Values (4)
---------------------------------------------------------
Terminal 7.0x $21.86 $21.15 $18.77 $16.72 $15.20
Values 8.0x $24.98 $24.17 $21.45 $19.11 $17.37
9.0x $28.10 $27.19 $24.13 $21.50 $19.54
</TABLE>
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(1) Median IBES estimates for 2000 and 2001, thereafter grown at median
long-term growth rate of 16.5%.
(2) Compound annual growth rate for 2000 - 2004
(3) Based on Adjusted Avis Earnings
(4) Using a discount rate of 17.5%
(5) Avis management using T&M inflation of 2.77% in its financial projections.
