A deal worth $1 billion has been announced which will see Avis Europe reunited with Avis Budget in the US. The American company will purchase its European counterpart, which is listed in London, for 315 pence per share. D’Ieteren, the Belgian car dealership which owns a 60 per cent stake in Avis Europe has given its full backing to the deal.

Avis Europe’s chief executive, Pascal Bazin, said customers’ would benefit from the deal because it will give Avis a stronger worldwide presence. He added that this would provide strategic benefits as well as access to capital. It will also help to strengthen the brand across Europe, he went on to say.

Avis Budget said the venture was likely to produce cost savings of around $30 million per year. The combined group is also expected to generate sales of around $7 billion in the 150 countries in which it will now operate. Mr Bazin said one of the biggest challenges facing car rental firms at the moment was the need for significant investment in vehicles, and the new deal promises to deliver this.

Avis Budget shed its European division in 1986. In 1989 the US group purchased its counterpart with GM and D’Ieteren as part of a consortium. In 1997 it floated its stake in the company on London’s stock exchange.

Avis in the US is currently involved in a long-running battle with rival Hertz to take control of Dollar Thrifty, the fourth largest car hire firm in America. Avis Budget is currently the third largest.