Investing.com -- Shares in Hertz Global Holdings Inc (NYSE:HTZ) surged more than 4% in after-hours trading after the rental car giant announced that it has received $2 billion in proceeds after the separation of its equipment rental business into a separate, publicly traded company.
Following Thursday's transaction at 5 p.m. EST and the subsequent 5-for-1 spinoff, Hertz said it expects to begin Friday's regular session with approximately 85 million common shares outstanding. With the proceeds, Hertz said it will use the additional funds to pay off a portion of its corporate debt, while continuing its focus on building its car rental division.
"Completing the separation of the equipment rental business delivers on the commitment our board made to shareholders in March 2014," Hertz CEO John Tague said in a statement. "Over the past twelve months, we've prepared the business unit to successfully operate as a stand-alone, publicly traded company by resizing its operations, and recruiting and installing a new management team as well as a board of directors with deep industry and public company experience."
Also on Thursday, Hertz announced a pair of supply agreements with Uber Technologies and Lyft on Thursday in a plan that is expected to broaden the company's imprint on the ride-sharing business. As part of Hertz's agreement with Uber, the ride-sharing company will set rates for its partners, who will be able to rent vehicles from numerous off-airport Hertz locations in the Los Angeles-area. Hertz will begin the initiative in Los Angeles, before expanding to other U.S. markets as part of the national agreement.
"This is a positive agreement for both Hertz and Uber," Tague added. "Utilizing cars that are rotating out of our consumer rental fleet creates a model that works for Hertz and for Uber partners by providing them with well-maintained, good condition cars. We consider this agreement to be largely complementary to our car rental business, and it enables us to leverage our fleet and distribution infrastructure to participate in the dramatic growth in the ride sharing, or e–hailing, segment."
Meanwhile, Hertz said its agreement with Lyft will be built on pilot models used in Las Vegas and Denver since last November. Hertz will begin renting cars to Lyft drives in Los Angeles and San Francisco, with other top markets expected to follow.
Hertz shares gained 1.76 or 4.17% to 44.00 in after-hours trading.