Hertz Corporation

Product Details

Historical Context

The Hertz Corporation, originally known as Rent-a-Car Inc., was founded by Chicago, Illinois native Walter L. Jacobs in 1918. This small car rental operation began with a dozen Model T Ford cars. Within five years, Jacob's fleet expanded to 600 vehicles—generating annual revenues of approximately $1 million. John D. Hertz, owner of Yellow Truck and Coach Manufacturing Company, developed an interest in the brand, leading to him purchasing the company in 1923. It was then renamed to Hertz Drive-Ur-Self System.

Despite being sold to John Hertz, Jacobs continued to serve as president and chief operating officer of Hertz Drive-Ur-Self System until 1961. After three years of ownership, John Hertz sold the rental car brand to General Motors Corporation in 1926, who later purchased the remaining shares of Yellow Truck and Coach Manufacturing Company in 1943. Under the ownership of General Motors, the company released the first rental car charge card in 1926, opened its first rental car location at Chicago's Midway Airport in 1932, and introduced the first one-way rental plan in 1933. Hertz Drive-Ur-Self System expanded services to Canada in 1938, Europe (France) in 1950, and South America in 1961.

John Hertz repurchased the brand from General Motors in 1953 through his other company, The Omnibus Corporation. As the new owner, he renamed the brand to The Hertz Corporation and introduced it to the New York Stock Exchange in 1954. The Hertz Corporation relocated their headquarters from Midtown Manhattan to Park Ridge, New Jersey in 1988.

Now operating as The Hertz Corporation, John Hertz purchased New York-based truck leasing company Metropolitan Distributors in 1954, including a fleet of 4,000 trucks. This acquisition increased The Hertz Corporation's fleet to 15,500 trucks and 12,900 passenger cars.

In 1967, The Hertz Corporation became a subsidiary of Radio Corporation of America. In 1985, the car rental company was sold to UAL Corporation, later known as Allegis Corporation, for a cash deal of US$587.5 million. This acquisition expanded Hertz's vehicle renting and leasing, with nearly 400,000 cars and trucks in 120 countries across the globe.

In the summer of 1987, Allegis Corporation chairman and president Frank A. Olson announced the company would be selling Hertz due to internal changes. Park Ridge Corporation, which was owned and operated under Ford Motor Company, purchased Hertz in October 1987 for US$1.3 billion.

By the second quarter of 2005, Hertz produced about ten percent of Ford's overall pre-tax profit. However, after 18 years of ownership, the Ford Motor Company announced it would be selling the Hertz brand with the intent to focus more on building Ford cars and trucks. Private equities Clayton, Dubilier & Rice, The Carlyle Group, and Merrill Lynch Global Private Equity agreed to purchase all shares of common stock in Hertz for an estimated US$15 billion, including debt, and the business itself for US$5.6 billion in 2005.

Operating as a public group since November 2006 under Clayton, Dubilier & Rice, Hertz began to expand through Europe and the United Kingdom. In late December 2009, Hertz announced the acquisition of used cars dealer British Car Auctions (BCA) from London-based equity firm, Montagu Private Equity, for an estimated £390 million.

Hertz Global Holdings Chairman and CEO Mark P. Frissora announced the company's purchase of Dollar Thrifty Automotive Group—a U.S.-based car rental brand with headquarters in Tulsa, Oklahoma, for US$2.3 billion. The business transaction included Hertz paying $87.50 per share of the Dollar Thrifty stock. The deal was finalized on November 19, 2012 and resulted in a combined 10,400 locations in approximately 150 countries. Before the merge, Dollar Thrifty was the fourth-largest car rental company.

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