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Hertz So Good: CD&R, Carlyle and BofA Recoup $2.3 Bln Investment and Then Some

Good things come to those who wait. And, especially to PE firms that know when to sell shares.

Hertz Global Holdings revealed yesterday its PE sponsors–Clayton, Dubilier & Rice, the Carlyle Group and Bank of America Merrill Lynch—sold 50 million shares in the company. Hertz did not reveal a price per share but I’m hearing they sold at $15.65 each, or $782.5 million.

Goldman Sachs, the underwriter on the deal, is buying the shares. CD&R, Carlyle and BAML will own 160 million shares or 39% after the deal. This is down from the 51% the sponsors held before the sale.

On Tuesday, Hertz’s stock shed 78 cents, or 4.79%, to $15.49 in afternoon trading.

The block trade is the second time that the PE firms have sold shares since Hertz went public in 2006. In June of 2007, CD&R, Carlyle and BAML sold 45 million shares at $22.25 each, according to a regulatory filing. Goldman Sachs, Lehman Brothers and Merrill Lynch were the joint bookrunners on the deal.

While the block trade is interesting, the PE firms have already recouped their $2.3 billion investment. The PE firms acquired Hertz in late 2005 for roughly $15 billion. Just months later, in June 2006, the PE firms received a roughly $1 billion dividend.

Hertz went public in November 2006, raising $1.32 billion. The PE firms did not sell stock. Instead, they received a $426.8 million dividend, according to regulatory filings.

This means that Clayton Dubilier & Rice, Carlyle and BofA Merrill Lynch made back their money when they sold stock in 2007 (the sponsors received $1.4 billion in dividends, plus another $1 billion from the secondary in 2007). The $782.5 million the PE firms stand to realize from the current block trade is just gravy. Also, their remaining stake of 160 million shares is valued at roughly $2.5 billion (at $15.49 a share).

“We see continued upside and are committed to the long-term success of the company,” a Carlyle spokesman says.

And, “the PE sponsors have recovered their investment,” a Hertz spokesman says.