In November 2006, Alec Berg, a successful hedge fund manager must decide whether to invest in the initial public offering (IPO) Corporation Hertz. IPO followed the leveraged buyout (LBO) of Hertz, which was completed in December 2005, three well-known private equity firms, which are combined to buy Hertz from Ford Motor Company for $ 14.9 billion. LBO sponsors took an additional $ 1 billion to fund redemption beginning to pay themselves a special dividend in June 2006. This loan will be repaid with IPO proceeds and the remaining proceeds from the IPO will go to the sponsors.
IPO generated widespread criticism in relation to the speed with which it was conducted IPO and payment of special dividend. In the face of this criticism, the demand for Hertz IPO weakened and the offer price has been reduced from the initial price range of the $ 16 - $ 18 to just $ 15. Berg has estimated at $ 15 per share, Hertz offers attractive investment of the fund. The case provides the necessary information for the students to analyze the return on their investment sponsors in Hertz and attractive $ 15 offer price of the public shareholders. The case also offers students the opportunity to discuss the dispute over the payment of the special dividend and the assertion that private donors are investing in the long term, creating value for the company. "Hide
by Susan Chaplinsky, Felicia C. Marston, Michael Pozzi Source: Darden School of Business 21 pages. Publication Date: March 10, 2009. Prod. #: UV1409-PDF-ENG
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