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.