|
Ford wants rest of Hertz
|
 |
September 21, 2000: 11:32 a.m. ET
Carmaker offers $597M for 18.5% of car rental leader it doesn't already own
|
NEW YORK (CNNfn) - Just three years after selling part of the company, Ford Motor Co. offered to buy back the 18.5 percent of rental car agency Hertz Corp. it does not already own for $597 million in cash.
The proposal, made to Hertz' officials in their offices in Park Ridge, N.J., Wednesday, offers Hertz shareholders $30 per share in cash, a nearly 24 percent premium over the company's closing price of $24.25 Wednesday.
Hertz (HRZ: Research, Estimates) shares surged $6.38 to $31.13 in mid-morning trading Thursday, indicating investors believe the company can obtain a higher price, either from Ford or another suitor.
The offer still must be approved by the Hertz board, Ford spokeswoman Karen Hampton said.
"This is just the beginning of the process," she said.
 Hampton said Ford does not specifically control any set percentage of the nine-member Hertz board, although the company's 81.5 percent stake obviously gives it significant influence on selection. Wayne Booker, Ford's vice chairman, and John Rintimaki, Ford's secretary, are on the board.
Hertz spokesman Rich Groome had no immediate comment other than to acknowledge receipt of the offer.
While the $30 price is a significant percent premium over Wednesday's closing price, it is well below the 52-week high of $51.75 Hertz hit Jan. 19, the day it posted strong fourth-quarter results. Hertz shares closed above $30 as recently as Aug. 31. The car rental leader lowered its earnings guidance for 2000 and 2001 after the market close that day and it lost 16 percent of its value in trading the next day.
Still, analysts largely consider the car rental industry to be undervalued on Wall Street, particularly because the sector has seen little consolidation to drive share prices upward.
Ford's offer comes as the board of competitor Avis Group Holdings Inc. is considering a bid from Cendant Corp. (CD: Research, Estimates) to buy the 82 percent stake in Avis it does not already own for $29 per share, a 14 percent premium over the company's stock price when the offer was first made.
Avis received the Cendant offer more than a month ago, but has made few public statements since, leading analysts to believe it has been unable to drum up a more attractive bid.
"We think that based on the research our advisors have done on this and the market price as of yesterday, this is a fair premium for [Hertz] shareholders," Hampton said. Ford is being advised by J.P. Morgan & Co. on the deal.
Ford first bought a stake in Hertz in 1987, then bought the rest of the company from its management in 1994. On April 25, 1997, it sold the 18.5 percent stake in an initial public offering. Shares were priced at $24 each and opened at $28 that day.
Ford (F: Research, Estimates) shares lost 06 cents to close at $25 in mid-morning trading. 
|
|
|
|
|
 |
|
