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NEW YORK (Reuters) - Ford Motor Co (NYSE:F - news) will sell its car-rental firm Hertz to a group of corporate-buyout firms, including Clayton Dubilier & Rice, Carlyle Group and Merrill Lynch Global Private Equity, for $5.5 billion to $6 billion, the Wall Street Journal reported on Thursday.
Citing people familiar with the matter, the newspaper said Hertz's fate could be determined as soon as Friday.
It said the private-equity firms would also assume Hertz's debt, which totals more than $10 billion, according to recent regulatory filings, of which around half is long-term debt.
The buyout firms will spend as little as $3 billion of their own funds and borrow as much as $12 billion to finance the purchase and the assumption of debt, the Journal said.
A winning bid by the Clayton Dubilier group would hand a rare defeat to a competing group of private-equity firms -- including Bain Capital, Blackstone Group, Texas Pacific Group and Thomas H. Lee & Partners -- people familiar with the matter told the paper. Both Ford and Hertz declined to comment.
The two groups have been pitted in an intense auction for Hertz. At the last moment, despite Hurricane Katrina potentially harming prospects for the car-rental business, the price tag actually rose, participants in the process told the Journal.
The newspaper said Ford had considered taking the company public, and it is possible Ford's board could return to that course at the last moment. The cash-strapped car maker wants to reduce the debt on its balance sheet, and it would no longer have to consolidate the debt of the fleet operations after a public listing.
Ford also faces a renewed need for cash, as sales of profitable sport-utility vehicles have slowed.
But selling Hertz outright would bring Ford more money more quickly than a public offering. And the company is ideally suited for private-equity investors, which prefer companies with steady, strong cash flows, upon which they can then pile on significant debt, the Journal said.
Citing people familiar with the matter, the newspaper said Hertz's fate could be determined as soon as Friday.
It said the private-equity firms would also assume Hertz's debt, which totals more than $10 billion, according to recent regulatory filings, of which around half is long-term debt.
The buyout firms will spend as little as $3 billion of their own funds and borrow as much as $12 billion to finance the purchase and the assumption of debt, the Journal said.
A winning bid by the Clayton Dubilier group would hand a rare defeat to a competing group of private-equity firms -- including Bain Capital, Blackstone Group, Texas Pacific Group and Thomas H. Lee & Partners -- people familiar with the matter told the paper. Both Ford and Hertz declined to comment.
The two groups have been pitted in an intense auction for Hertz. At the last moment, despite Hurricane Katrina potentially harming prospects for the car-rental business, the price tag actually rose, participants in the process told the Journal.
The newspaper said Ford had considered taking the company public, and it is possible Ford's board could return to that course at the last moment. The cash-strapped car maker wants to reduce the debt on its balance sheet, and it would no longer have to consolidate the debt of the fleet operations after a public listing.
Ford also faces a renewed need for cash, as sales of profitable sport-utility vehicles have slowed.
But selling Hertz outright would bring Ford more money more quickly than a public offering. And the company is ideally suited for private-equity investors, which prefer companies with steady, strong cash flows, upon which they can then pile on significant debt, the Journal said.
Isn't that (Hertz) where you work Darin? If so, I hope it turns out to be good for you.
