Avis to Buy Franchisee First Gray Line

HFS Inc. said its Avis Rent A Car Inc. unit agreed to buy its second-largest North American franchisee, First Gray Line Corp., for about $195 million in cash. First Gray has 70 locations throughout Southern California and the Southwest.

In a separate deal Monday, Republic Industries Inc. agreed to pay $150 million for EuroDollar Holdings in a move designed to give it a foothold in Europe. In the last year, Republic has acquired several U.S. car rental companies.

For Republic, which is led by former Blockbuster video chief H. Wayne Huizenga, the bid is its first acquisition in Europe’s car rental industry, which has annual sales of about $5 billion, compared with $14 billion in the U.S. Europe’s car rental rate is about half that of the U.S., according to a recent analysis by Avis Europe, EuroDollar’s main rival.

EuroDollar is Britain’s second-largest car rental company. Avis, which is majority-owned by Belgium’s D’Ieteren, has about 15% of the British market, compared with 14% for EuroDollar.

“This is a solid company and we see growth potential in the market,” said Geoff Corbett, the managing director of Republic’s European car rental unit, which is now composed of the U.S.-based Alamo and National companies.

Corbett said Republic plans marketing initiatives to win new customers within Europe, and also hopes to use its large U.S. business to sell more rentals to American travelers when they visit the Continent.

In the last year, Fort Lauderdale, Fla.-based Republic has acquired National Car Rental System Inc., Alamo Rent-A-Car Inc., Value Rent-A-Car Inc. and Sprint Rent-A-Car Inc., and has agreed to acquire Snappy Car Rental Inc. It is also the single largest U.S. car dealer, as owner of AutoNation, a chain of used-car dealerships.

HFS, meanwhile, said the deal to buy First Gray is expected to close this month, subject to customary conditions and regulatory approvals. Parsippany, N.J.-based HFS said First Gray, through its subsidiary Grand Rent A Car, had revenue of about $191 million for fiscal 1996 and more than 1.2 million car rentals.

HFS owns and operates hotels; real estate brokerages, including Century 21 and Coldwell Banker; and condominium and vacation time-share businesses.

Shares of HFS gained $1.06 to close at $62.56. Republic Industries rose 6 cents to close at $23.44. Both trade on the New York Stock Exchange.