Hertz buyout completed

Clayton Dubilier & Rice, The Carlyle Group and Merrill Lynch have completed their buyout of rental car giant Hertz.

The Clayton Dubilier & Rice-led buyout of rental car giant Hertz was completed today. The firm teamed up with The Carlyle Group and Merrill Lynch Global Private Equity for the $15 billion (€12.7 billion) deal, which was first announced in September. Hertz had previously sat under the Ford Motor umbrella.

The sponsors committed a total of $2.3 billion of equity to the deal, split three ways. According to a press release, the company also took on $5.6 billion of corporate debt, and $4.8 billion of financing against its US fleet of vehicles, with another $2.1 billion of debt being leveraged against its international fleet.

Deutsche Bank AG, according to earlier reports, led the debt syndicate to underwrite the bank loan and bond component, while Lehman Brothers handled the asset-backed securities tranche.

With the completion of the deal, the acquisition now stands as the second largest buyout of all time, and represents the new buying power of private equity groups today. (The Kohlberg Kravis Roberts $26 billion LBO of RJR Nabisco still stands as the largest deal ever.) Considerably larger fund sizes, coupled with an accommodating debt market, have put private equity groups in position to reach ever higher in their pursuit of deals.

Carlyle raised $7.85 billion for its fourth US fund earlier this year, while Clayton Dubilier & Rice has so far amassed a more than $3 billion war chest for its latest vehicle, which is still in the market.

The Hertz acquisition also follows other mega-deals from this year, such as the buyouts of SunGard Data Systems and Toys ‘R’ Us, valued at $11.3 billion and $7.3 billion, respectively.

Debevoise & Plimpton served as legal counsel to the investor group, which brought in a team of banks to advise on the financial side. Deutsche Bank, Lehman Brothers, Merrill Lynch, Goldman Sachs, JPMorgan, BNP Paribas, The Royal Bank of Scotland and Calyon were all listed as financial advisors to the investors.

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