Case questions: Bidding for Hertz
1) How does the dual-track process used by Ford to initiate “consideration of strategic alternatives” affect the bidding process for Hertz?
2) In what way does Hertz conform or not conform to the definition of an “ideal LBO target”? Do you believe Hertz is an appropriate buyout target
3) Strategically, what value creating ...view middle of the document...
3 billion in equity, what return can they expect to earn?
6) If Carlyle desires a 20% target return on its equity investment, does your analysis suggest that $2.3 billion is too much to pay, or can it afford to pay more – in either case, by how much?
7) What is the market-required rate of return for this investment, and why might this differ from the sponsor’s target return?
8) What is the value of Hertz using the equity residual method of valuation?
9) Assess the amount Ford is likely to receive if it pursues its IPO alternative versus being bought by a private equity group.
10) What factors would be considered in assessing whether the consortium’s bid is likely to beat that of a rival group?