Shares of Hertz Global (NYSE:HTZ) popped 8% Monday morning amid reports the rental-car company is preparing a $4.5 billion spinoff of its construction equipment rental business.
The possible spinoff comes as Hertz remains under pressure from investors to boost free cash flow by exiting the rental business.
According to the Financial Times, Hertz could announce the separation of the equipment business this week.
The company has also been exploring potential merger targets and is mulling a reverse Morris Trust, which is a tax-efficient transaction that combines a spinoff with a merger, the FT reported.
Park Ridge, N.J.-based Hertz did not immediately respond to a request for comment.
Hertz’s construction equipment rental business loans out industrial equipment like trucks and drills and generated $1.1 billion of revenue through the first three quarters of 2013.
Analysts and investors have said Hertz could significantly boost its free cash flow by exiting the equipment rental business, which is known as HERC.
Shares of Hertz climbed 7.70% to $27.98 Monday morning, trimming their 2014 decline to 2%.
Hertz enacted a poison pill near the end of 2013, apparently in an attempt to ward off pressure from billionaire investor Carl Icahn, who was rumored to have acquired a major stake in the company. However, Icahn told FOX Business last month he does not hold a major position in Hertz and the company is not his next proxy target.