Hertz Corporation (A) Harvard Case Solution & Analysis | Recommend this | | Considering leveraged buyout Hertz in 2005, the complex, high-profile deals, and a good example of best practice in private equity. First of two parts, the Hertz LBO, taking the point of view of Clayton, Dubilier & Rice, the leader of the consortium of private trading shares to buy Hertz from Ford in the auction. Set in the final round of the auction, a pressing issue for the consortium is how to raise
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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
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Bidding on Hertz LBO case study The main issue of the case is that The Carlyle Group and its partners (Clayton, Dubilier & Rice, and Merrill Lynch Global Private Equity) must make a decision about the final terms of a bid to purchase the Hertz Corporation, a wholly owned subsidiary of The Ford Motor Company. Hertz had been put up for sale in June 2005. In order to initiate “consideration of strategic alternatives” Ford entered a dual-track process, which means pursuing an initial public offering
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Case 9 & 10 Analysis Seagate Technology Buyout The Hertz Corporation Advanced Corporate Finance MW 2:00-3:15 PM Question 1 On page 1, the “value-gap” is two-fold. It signifies an under-valuation of Seagate’s core disk drive operating assets due to unfavorable public market investor preferences. Furthermore, the value of the Veritas share price has caused the Veritas stake to far outweigh the value of Seagate’s stand-alone market capitalization. Since Seagate does not own at least 80%
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9-208-030 REV: JANUARY 16, 2009 TIMOTHY A. LUEHRMAN DOUGLAS C. SCOTT The Hertz Corporation (A) We started banging on the door of Ford in 2002 and got very little reception at first. I wouldn’t say we got laughed out of the room, but close to it. — David Wasserman, Clayton, Dubilier & Rice In the first days of September 2005, partners at the private equity firm Clayton, Dubilier & Rice (CD&R) were preparing a final bid in pursuit of the largest and most complicated deal they had ever undertaken
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About this Report Hertz finalised its acquisition of Dollar Thrifty in 2012, giving it a much larger presence in the North American market. The deal increased its presence in the off-airport leisure segment and has given it a mid-tier brand, thereby allowing it to continue to position the Hertz brand as premium. Brazil and China are new areas of interest for the company, as it continues to consolidate its position as a global player. Download the full company profile: L'Oréal Company Profile -
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affects the bidding process for Hertz by giving Hertz another plan of attack if other viable sale opportunities fall through. By obtaining an IPO price as a base for the value of the company, Ford’s strategy would give Hertz other options to retrieve necessary capital, thus reducing the amount of risk. This strategy would then give Hertz a base bid that would be either equal to or above the amount of what could be theoretically obtained from an IPO. 2) One way that Hertz conforms to be an “ideal LBO
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Introduction: Hertz, the largest car rental company in the US, has had its share of financial problems. This has resulted in massive layoffs. Some investors became concerned when Hertz was placed on the Audit Integrity list of American Companies without any doubt to go bankrupt. Hertz filed a suit against the research company but subsequently dropped it. Like many of the largest airlines and other travel firms, Hertz suffers from being in a business in which it has
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The Hertz Corporation – Leveraged Buy Out Key Inferences and Conclusions: 1. Hertz was attractive as a leverage buyout candidate, having: • Relatively low existing debt loads with assets available to further leverage; • A multi-year history of stable and recurring cash flows; • Hard assets (Rental Fleet and Equipment) that may be used as collateral for lower cost secured debt; • The potential for new management to make operational or other improvements to the firm to boost cash flows; •
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covered by a put option. Roughly 85 % of Hertz’ domestic fleet and 74 % of its international fleet were program cars. Program cars will become more expensive in the future due to the fact that Ford and GM adopted new market strategies that deemphasized lower-margin sales of program cars Risk cars exposed the company to residual value risk. Generally less expensive than program cars. What could be the possible motivations for CD&R to buy (syndicated) Hertz? • Under exploiting of the firm’s
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