The buyout of Hertz, the biggest car rental company in the US, by three private-equity players will be the biggest after KKR's purchase of RJR Nabisco for $26 billion in 1989. The buyout of US software company Sungard Data Systems earlier this year by a consortium of seven private-equity firms for $11.4 billion was briefly the second-largest such deal in history. The sale of Hertz by Ford Motor Company to Clayton, Dubilier & Rice, the Carlyle Group and Merrill Lynch's private-equity unit for about $15 billion tops that. The consortium beat a rival bid from another group of private-equity players including Texas Pacific, Blackstone Group, Thomas H Lee Partners and Bain Capital Partners.
Innovation
In addition to the huge size of the Hertz buyout, the private-equity firms' innovative use of securitization sets it apart. Under the terms of the deal, announced in September, private-equity sponsors will pay Ford $5.6 billion and assume $9.4 billion in debt. Ford has offered Hertz investors the option to exchange into Ford Motor Credit Corp. The sponsors will pay Ford for paper that is exchanged.
They plan to refinance approximately $6 billion in the structured finance market.