EXHIBIT (c)(4)
Presentation to:
THE SPECIAL COMMITTEE OF
AVIS GROUP HOLDINGS INC.
September 14, 2000
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TABLE OF CONTENTS
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I. INTRODUCTION
II. TRANSACTION RATIONALE
III. VALUATION PERSPECTIVE
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INTRODUCTION: TRANSACTION OVERVIEW
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o $29.00 per share
o All cash offer
o Meaningful premium to historical and projected trading values
o No financing contingencies
o Certainty of closure
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TRANSACTION RATIONALE
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o Royalty paid to Cendant viewed by analysts and investors as reducing
stand-alone value of Avis car rental business. Royalty is viewed as either:
-- A 4+ point cost disadvantage
-- Equivalent to nearly $1 billion in debt
o Lack of investment grade access to capital is increasing competitive
disadvantage in corporate fleet
o Cendant's liquid stock ownership position perceived as "overhang" on Avis'
stock price
o Avis management believes the Cendant relationship hampers Avis' strategic
flexibility:
-- Cendant approval required for change of control of Avis under the
trademark license
-- Cendant owns Wizcom systems (~$50 million annual payment to Cendant)
-- Cendant owns rights to use Avis trademark in businesses outside of car
rental
o These factors make strategic consolidation in the travel industry harder for
Avis to pursue
o Cendant is the logical buyer of Avis:
-- Reunites the Avis name, Wizcom and related technology with the business
operations
-- Reflects the evolution of the respective businesses of Avis and Cendant
since the time of the Avis IPO
-- Creates a more efficient operating and financing structure
-- Cendant has no interest in selling its existing investment in Avis or in
transferring Avis' rights to the name and technology to any third party
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VALUATION PERSPECTIVE
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CENDANT'S OFFER REPRESENTS A MEANINGFUL PREMIUM TO THE TRADING LEVELS OF AVIS
PRIOR TO THE OFFER.
PREMIUM TO HISTORICAL TRADING PRICES
$29 Offer
Avis Premium
Data to Avis Data
Prior to Announcement: ------ ------------
1 Month (7/14/00) $23.56 23%
1 Week (8/8/00) 23.19 25%
1 Day (8/14/00) 25.50 14%
Initial Mgmt Meeting w/Avis (7/11/00) 21.75 33%
52 Week High (12/31/99) (1) 25.56 13%
52 Week Low (3/7/00) (1) 13.38 117%
Day Prior to Repurchase Announcement (8/9/00) 23.75 22%
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(1) 52 week high/low as of 8/14/00.
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VALUATION PERSPECTIVE
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COMPARABLE COMPANY ANALYSIS
($ in millions, except per share information)
<TABLE>
<CAPTION>
Cendant
Offer For
Avis (1) Hertz (2) Budget(3) Dollar ANC (4)
---------- --------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Ticker AVI HRZ BD DTG ANCX
Price as of 9/13/00 $29.00 $24.94 $4.00 $18.94 $6.38 Peer Group
52 Week High 25.56 51.75 10.44 24.25 8.00 Median
52 Week Low 13.38 24.81 3.19 11.38 4.38 (ex. Avis)
Market Capitalization (6) 909 2,686 149 465 288 ----------
Total Debt/Total Capital 86.6% 81.0% 83.8% 82.7% 85.5% 83.2
Earnings Estimates:
LTM EPS $2.82 $3.32 $0.07 $2.98 ($1.32)
2000E EPS (5) 3.13 3.27 0.50 3.09 1.17
2001E EPS (5) 3.98 3.42 0.69 3.35 1.57
Price as a Multiple of:
LTM EPS 10.3x 7.5x NM 6.4x NM 6.9x
2000E EPS 9.3x 7.6x 8.0x 6.1x 5.4x 6.9x
2001E EPS 7.3x 7.3x 5.8x 5.7x 4.1x 5.7x
No. of Analysts Covering 10 10 7 7 1
</TABLE>
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* All information at or for the last twelve months ended 6/30/00 unless
otherwise noted. Market prices as of 9/13/00.
(1) Pricing multiples based off Cendant's offer for Avis of $29/share; 52-week
high/low as of 8/14/00.
(2) Hertz is owned 80% by Ford Motor Company.
(3) Excludes one-time pre-tax 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 two quarters of 2000.
(5) IBES estimates, except Avis which are based on Avis management press
release of 9/1/00.
(6) Market Capitalization calculated using diluted shares outstanding for the
latest reported quarter.
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VALUATION PERSPECTIVE
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o On September 1, 2000, Hertz pre-announced an expected earnings shortfall
for the balance of 2000 and for 2001
o Consensus EPS estimates for Hertz for 2000 and 2001 were reduced by 6.9%
and 9.7% respectively
o As a result, several equity research analysts lowered recommendations
and/or price targets for Hertz; in addition, an equity research analyst
lowered Dollar Thrifty's recommendation
o Despite reaffirmation of EPS estimates for 2000 and 2001 by several
management teams and equity analysts, prices for most of the rental car
companies have declined
o Avis' stock price, however, has remained steady due to the current Cendant
offer
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VALUATION PERSPECTIVE
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INVESTORS HAVE VIEWED THE HERTZ PRE-ANNOUNCEMENT AS HAVING SECTOR-WIDE
IMPLICATIONS. COMPARABLE COMPANIES' STOCK PRICES HAVE FALLEN BETWEEN 9% AND 19%.
STOCK PRICE PERFORMANCE SINCE AUG 31, 2000 (1)
[Line Graph regarding indexed stock price performance for Avis, ANC, Budget,
Dollar and Hertz, for the time period beginning on 8/31/00 and ending on
9/14/00, showing Avis decreasing 0.6%, ANC decreasing 8.9%, Budget decreasing
11.1%, Hertz decreasing 18.6% and Dollar decreasing 16.3%.]
Closing Prices
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8/31/00 9/13/00 % Change
------- ------- --------
Avis $30.75 $30.94 0.6%
ANC 7.00 6.38 -8.9%
Budget 4.50 4.00 -11.1%
Hertz 30.63 24.94 -18.6%
Dollar 22.63 18.94 -16.3%
Mean (excluding Avis) -13.7%
Median (excluding Avis) -13.7%
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Source: FactSet database.
(1) Hertz pre-announced on 9/1/00 that earnings for the remainder of 2000 and
2001 would be lower than previously expected.
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VALUATION PERSPECTIVE
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FOR 2 YEARS PRIOR TO THE CENDANT OFFER, AVIS' P/E WAS APPROXIMATELY 65% OF
HERTZ'S FORWARD P/E.
AVIS FORWARD P/E RELATIVE TO HERTZ
[Line Graph regarding price to forward earnings ("Forward P/E") showing Avis
relative to Hertz for the time period beginning on 8/14/98 and ending on 8/14/00
(one day prior to Cendant's original offer). During this time period, Avis'
Forward P/E traded at a high of 82% relative to the Hertz Forward P/E, a low of
48% and a median of 65%.]
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Source: FactSet database.
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VALUATION PERSPECTIVE
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BASED ON THE IMPLIED VALUATIONS FROM THE RELATIVE HISTORICAL P/ES, CENDANT'S
OFFER REPRESENTS A MORE THAN 60% PREMIUM TO THE IMPLIED AVIS SHARE PRICE.
IMPLIED VALUATION BASED ON HISTORICAL P/E RELATIONSHIP TO HERTZ
<TABLE>
<CAPTION>
Current Implied Avis Implied Premium of
Historical 1 Yr Forward P/E Hertz Avis 12M Fwd Avis Price Offer ($29)
Avis Hertz Avis/Hertz P/E (1) P/E EPS(2) per Share to Implied
---- ----- ---------- ------- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Last Two Years
(8/14/98-8/14/00)
Mean 9.2x 14.2x 65% 7.5x 4.9x $3.60 $17.54 65%
Median 9.3x 14.1x 65% 7.5x 4.9x $3.60 $17.48 66%
Last Twelve Months
(8/14/99-8/14/00)
Mean 7.1x 11.4x 63% 7.5x 4.7x $3.60 $16.91 71%
Median 6.9x 11.9x 62% 7.5x 4.7x $3.60 $16.77 73%
Year to Date
(1/3/00-8/14/00)
Mean 6.2x 10.0x 62% 7.5x 4.7x $3.60 $16.88 72%
Median 5.8x 9.2x 62% 7.5x 4.6x $3.60 $16.72 73%
Mean $17.05 70%
Median $16.90 72%
High $17.54 73%
Low $16.72 65%
</TABLE>
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(1) Hertz twelve month forward P/E based on stock price at 9/13/00 of $24.94
and First Call estimates of earnings per share of $1.30 and $0.51 for the
3rd and 4th quarters of 2000 and $0.50 and $1.00 for the first two quarters
of 2001.
(2) Avis twelve month forward EPS estimate based on management press release of
9/1/00 with earnings per share of $1.31 and $0.30 for the 3rd and 4th
quarters of 2000 and half the 2001 earnings per share of $3.98 for 2001
(quarterly estimates for 2001 not available).
