Hertz Global Holdings Inc (NYSE:HTZ) recently announced selling its portion of $100 million stake in CAR Inc., a China Rental Company. Hertz had invested the money in the Chinese company in April 2013.
About the transaction
Hertz Global Holdings Inc decided to sell 59.57 million shares at a price of HK$13.01 per share to a third party, name of which it did not disclose. This means that the stake was sold at a 5.6% discount than the price at which stock closed on Wednesday.
After the sale of its stake, Hertz Global Holdings Inc is left with approximately 13.6% of the company. The reason for holding on to the stake in Chinese company indicates its strategic plans, where Hertz seems to cling on to the Chinese pie without giving away everything.
Impact of transaction
This transaction affected the position of the Chinese car rental company, which witnessed a downward trend of the shares at 7.3% in Hong Kong. In 2013, Hertz had acquired a 19% stake in CAR Inc. The purpose of this acquisition was to channelize the business from the Dragon in the outward direction. It must be noted that Hertz has become an established brand in China. Before September 2014, CAR Inc. operated its business as a private company. It went public on the Beijing trading and put its shares for sale in 2014 in Hong Kong.
The sale of this stake suggests strategic action on the part of Hertz Global Holdings Inc (NYSE:HTZ), which is trying to further reinforce its foothold on the Dragon’s chest. The importance of Hertz can be estimated from the fact that the shares of CAR Inc’s dwindled across the markets to a massive extent. Asian markets, especially China, holds a lot of importance for the U.S. based companies because of the massive revenue that they generate from huge population of the dragon economy.
Bloomberg approached Hertz for the comment, but no official was available to reply.