Hertz eyes sale of equipment rental unit Hertz is considering the spin-off or sale of its equipment rental business, amid pressure from shareholders and stakebuilding by activist hedge funds including Dan Loeb's Third Point. Its shares jumped in New Year's eve trading after it was reported that Mr Loeb had amassed a stake of less than 5 per cent and Hertz said it had instituted a "poison pill" to block anyone from accumulating more than 10 per cent. IN Construction The car hire group has engaged Bank of America Merrill Lynch and Barclays for advice on improving shareholder returns and defending itself against an attack by activists. The separation of the equipment rental business - which loans out industrial equipment ranging from diggers and drills to trucks and trailers - has been a focus of investor questions for several years. Analysts said it would probably be central to any activist's demands for change at the company. The company "has had dialogue with a number of shareholders and welcomes their input towards the goal of enhancing shareholder value," Hertz said in a statement announcing the poison pill. It said the plan would allow it to continue with a strategy that included "the evaluation of potential changes to the company's operating structure and capital allocation." The future of the equipment rental business, HERC, will be part of that review, according to people familiar with the situation. It will be an early focus for Hertz's new chief financial officer, Tom Kennedy, formerly of hotels group Hilton Worldwide, who joined in December. Stakebuilding by Third Point was first reported by CNBC on Tuesday, the day after Hertz responded to what it called "unusual and substantial activity in the company's shares." It remains unclear if the hedge fund is the only, or even the largest, activist investor piling in. Third Point declined to comment. Corvex Management, run by Carl Icahn protégé Keith Meister, is also a Hertz investor. In our view, if Hertz was to exit the equipment rental business, its free cash flow profile would dramatically increase JPMorgan analyst Kevin Milota Mr Loeb is famous for launching scathing public attacks on the management of companies he believes are undervalued, including recently at auction house Sotheby's, and for advocating for corporate restructuring, as he did at Sony, which rebuffed his demand that it should spin off its entertainment division. Hertz shares closed $2.71 higher at $28.62 on Tuesday in New York, as analysts speculated that pressure from activists could accelerate a decision on HERC. Worldwide equipment rental accounted for $1.1bn of the company's $8.2bn of revenue in the first nine months of 2013, and $207m of its $1.3bn in adjusted pre-tax profit. "We believe that investors have become increasingly focused and frustrated that Hertz has not moved faster with a potential outright sale or [spin-off] of that capital intensive business segment," JPMorgan analyst Kevin Milota wrote in a note to clients. In our view, if Hertz was to exit the equipment rental business, its free cash flow profile would dramatically increase, as we estimate $267m in net fleet investments in 2013 and $250m in 2014, that would otherwise not be necessary. Adam Jonas of Morgan Stanley wrote: "A sale of HERC with proceeds used for share buyback could be between 10 per cent and 50 per cent accretive to 2014 earnings per share, depending on the tax basis."