PARK RIDGE, N.J. --- Ford Motor Co. agreed Monday to sell Hertz Corp., its wholly owned auto rental subsidiary, for $5.6 billion in cash to a private equity group, the Associated Press reported.
The nation’s second-largest automaker will sell shares of common stock in Hertz to a group composed of Clayton, Dubilier & Rice, The Carlyle Group and Merrill Lynch Global Private Equity in a deal worth an estimated $5 billion, including debt.
Since April, Ford has been open about its consideration to end its 11-year ownership Hertz to focus on its automotive business. The money from the deal should help Ford, whose falling SUV sales and rising health care costs contributed to its 19 percent second-quarter profit loss, the newspaper report said.
The rental company is planning a cash tender offer for up to $2.3 billion of outstanding debt securities in connection with the deal. The rest of the Hertz debt will be refinanced.
The deal, subject to regulatory approvals, is expected to close by the end of the year, according to the report.
Founded in 1918, Hertz operates 7,400 locations in more than 150 countries.