Ford Seeks to Buy Rest of Hertz to Expand Presence in Auto Rentals

DEARBORN, Mich. —  Ford Motor Co. on Thursday offered to acquire the 18.5% of Hertz Corp. that it does not already own for $30 a share, or $597 million, as part of a strategy to expand its presence in high-profit services such as vehicle rentals.

Ford, the world’s No. 2 auto maker, said its offer for the remaining 19.9 million shares of Hertz--the No. 1 car rental company--represents a 24% premium over Hertz’s Wednesday closing price of $24.25, a 52-week low for the stock.

Hertz said its board will meet soon to evaluate the offer.

Ford, which owns 81.5% of Hertz, had spun off a minority stake in the car rental company in a 1997 initial public offering, taking advantage of investor interest in the industry.

The spinoff occurred about the same time other auto makers were exiting the car rental business.

Hertz shares spiked up $7.38 to close at $31.63 on the New York Stock Exchange. Ford fell $1.44 to close at $23.63, also on the NYSE.

Hertz stock hit a 52-week high of $51.75 in January, but fell sharply after it warned Aug. 31 that profit in its third and fourth quarters would miss expectations because of lower demand caused by airport travel disruptions and price competition.

Ford’s offer comes a week after the auto maker said it would repurchase up to $5 billion of its own stock. The timing of the announcement surprised analysts because the auto maker is embroiled in the Firestone tire recall.

Ford had about $25.6 billion in cash and cash equivalents at the end of its second quarter, but the company paid out $5.7 billion to shareholders Aug. 8 in a shareholder enhancement plan.