Europcar : Update on the rumours of an acquisition of Goldcar by Europcar

In this note, we shall review the rumours concerning Europcar's possible acquisition of Goldcar (El Confidential article of 20 April 2017) and the impact that a target of this size could have on the group's credit profile. At this juncture, we are reiterating our Stable credit opinion and Neutral recommendation on the EUROCA bonds. - - >Goldcar is a Spanish company that is positioned in the economy-leisure segment. - The company has grown very rapidly in recent years, driven by its international expansion (mainly in Italy and Portugal) and by a buoyant market in Spain. In 2016 Goldcar generated sales of € 255m and reported EBITDA of € 129m. In our opinion, Europcar considered making a bid for Goldcar. - Europcar's management has made no secret of its interest in carrying out acquisitions in Europe. Given its size, Goldcar is not necessarily among the group's priority targets (who looks at smaller-sized targets), but the strategic interest is clear for all to see and we believe that management could not have failed to have a look on this target. By snapping up Goldcar, Europcar would strengthen its market leadership in Spain, becoming the no. 1 in the buoyant low-cost leisure segment, and could rely on Goldcar's incursions into other European markets to ramp up the development of its economy division. The low-cost BU would then account for around 15% of group sales (vs. 4% in 2016).