DETROIT – Ford Motor Co. (F) said Wednesday it completed the sale of car rental company Hertz Corp. to a private equity group and it plans to report a fourth-quarter pretax gain from the transaction of $1.1 billion to $1.3 billion.
The cash infusion comes as Ford faces a deepening financial crisis and its key North American vehicle unit is losing money.
The "timing is welcome," said GimmeCredit analyst Craig Hutson, adding the cash give the automaker more financial flexibility to execute a turnaround plan for its North American operations
Shares of the Detroit-based automaker rose more than 2 percent on the New York Stock Exchange.
The investor group, composed of Clayton Dubilier & Rice, The Carlyle Group and Merrill Lynch Global Private Equity, bought Hertz in a transaction valued at about $15 billion, including the assumption of debt.
Under the terms of the agreement, reached last September, Ford received $5.6 billion in cash for the sale of its 100 percent ownership interest in Hertz, the automaker said.
Ford Chairman and Chief Executive Bill Ford Jr. said in April the automaker was mulling spinning off or selling Hertz to improve liquidity and move away from non-core businesses.
The No. 2 U.S. automaker has seen its margins squeezed by soaring health care and raw material costs, and a decline in U.S. market share. Ford is expected to give details of a comprehensive turnaround plan for its North American operations in January.
In the third quarter, Ford swung to a loss, the first quarterly loss for the automaker since the fourth quarter of 2003. Even though Ford remains in the black for the full year, its key North American vehicle operations have lost over $1.4 billion before taxes year to date.
Ford shares were up 14 cents at $8.19 on the NYSE.