According to sources familiar with the matter at hand, Volkswagen AG is holding talks with Europcar Mobility Group SA to acquire it. The potential deal will allow the carmaker to better capitalize on its fleet.

The dealmaking comes at a time when the French rental firm is struggling to cope with the economic fallout of the COVID-19 pandemic which was first reported in Wuhan, China and has since spread across the globe. The potential deal represents a reversal for Volkswagen, which sold Europcar to investment firm Eurazeo SE in 2006.

According to a source, Volkswagen has reached out to Europcar to express its interest in acquiring it and carry out due diligence. Sources have cautioned against expectations saying the talks are at a preliminary stage and far from certain given the financial toll of the coronavirus outbreak on Europcar.

With a net debt, as of the end of March 2020, of 1 billion euros, Europcar has a market capitalization of $441 million (390 million euros), and has attracted interests from private equity firms, including Apollo Global Management Inc, said sources.

Volkswagen, Apollo and Eurazeo, which currently owns close to 30% of Europcar, declined to comment.

In May 2020, Europcar said it had secured a 307 million euro financing package to manage through the coronavirus crisis, which included a 220 million euro loan guaranteed at 90% by the French state.

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