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Thursday, 21 September, 2000, 15:50 GMT 16:50 UK
Ford eyes Hertz bargain
A Ford Mustang
Hertz shares stand at a 52-week low
Ford Motor Company of the US has offered to reacquire the 18.5% of car hire company Hertz that it does not own for $30 a share, or $597m.

Car-making giant Ford had sold off a minority stake in the world's largest car hire company in a 1997 initial public offering.

It said the $30 a share price it was now offering represented a 24% premium to the $24.25 price at which Hertz shares closed on 20 September.

The shares, listed on the New York Stock Exchange, had climbed to a 52-week high of $51.75 in mid-January but had since slumped to a 52-week low of $24.25, following which the Ford announcement was made.

In late August, Hertz had warned that third- and fourth-quarter profits would be below earlier expectations, prompting the shares to slide.

It said that airport travel disruptions had reduced hire car demand.

Enhanced flexibility

Ford's offer is subject to approval by Hertz directors, the board's favourable recommendation to shareholders and the negotiation and implementation of a merger agreement.

"Since the Hertz IPO in 1997, we have intensified our focus on becoming the world's leading consumer company for automotive products and services," Ford chief financial officer Henry Wallace said in a statement.

"Hertz is one of the world's strongest brands and an integral part of this focus. Acquiring the minority interest will support this strategy and enhance the operating flexibility between us and Hertz."

The announcement of the Hertz deal comes a week after Ford said it would buy back up to $5bn of its own stock.

In recent weeks, Ford also made headlines when it pulled out of an estimated $7bn deal to buy South Korea's debt-laden Daewoo Motor.

The world's number two car maker is also involved in controversies in the US and elsewhere after a string of fatal road accidents were blamed on faulty Firestone tyres fitted to Ford Explorer vehicles.

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