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Hertz Lbo

In: Business and Management

Submitted By yanksfan1702
Words 436
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The value of the Hertz Corporation calculated using discounted cash flow method is approximately $ 6.1 billion, the offer is $ 5.6 billion. The final offer of $ 5.6 billion is quite reasonable for the Hertz Corporation as it was considering that it would not be able to receive $ 5.4 billion earlier. The price is little lower than $ 6.1 billion but is quite reasonable.
Hertz is valued at
The possible impact of synergies after making several changes had reduced the costs and increased the profitability of the company. This had increased the price or value of the company and thus increased to $ 6.1 billion.
The value of the Hertz Corporation is calculated using the cash flows generated by the RAC and HERC, these are combined together and adjustments are made to arrive at the corporate EBITDA. In calculating the value of the Hertz Corporation the impact of the synergies was also considered. By considering the forecasted value of the Hertz Corporation, sponsor will need to raise an extra $ 700 million equity. This is because value has increased from $5.4 billion to $ 6.1 billion, a difference of $ 700 million which is required to be raised by the sponsor.
CCM must bid for the revised final offer made by the company, because by making the changes in the organization, it will reduce the cost and improve the profitability of the Hertz Corporation. Thus by considering these changes the value of the company has increased to $ 6.1 billion. So, it is better for CCM to accept the final bid of $ 5.6 billion to purchase the holding in Hertz Corporation.
The credit rating of the Hertz Corporation is BBB. The credit rating is expected to deteriorate further, because the credit rating of the Ford and GM had decreased and this may lead to their rating dwindling as well. However, the acquiring entity is considering to increase the credit rating of the Hertz Corporation to AAA, so...

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