Republic Industries Inc. has solidified its position in the insurance replacement end of the rental car industry by purchasing Snappy Car Rental Inc., No. 2 in the segment.
Republic has the option of completing the deal for $26 million in cash or common stock.
With 220 branch locations in 38 states and a fleet of about 14,500 vehicles, Tulsa, Okla.-based Snappy is second only to Enterprise Rent-A-Car in the insurance replacement market.
The insurance replacement market can complement the many new-car dealerships Republic has bought, said Jon LeSage, editor of Auto Rental News, a Redondo Beach, Calif., industry publication. Customers getting their cars repaired need replacement vehicles.
'Dealers are looking more to profit centers,' LeSage said, and having rental counters within a dealership can be a profit center. Adding Snappy to its stable of insurance replacement companies puts Republic in a position to displace Enterprise counters in some of the dealerships it owns, he said. Other insurance replacement firms in Republic's stable include Spirit Rent-A-Car and the Alasys division of Alamo Rent-A-Car.
Analyst Jordan Hymowitz, who follows the rental car industry for Montgomery Securities in San Francisco, said the Snappy acquisition is a good fit for Republic. Once cars have cycled through the fleets of Republic's two big rental car firms, Alamo and National Car Rental System Inc., they can be 'cascaded' to Snappy, Spirit or Alasys and from there to Republic's AutoNation USA superstores, he said. Snappy is owned primarily by an investor group led by Jacobson Partners, a New York investment firm.