Ford Motor Co. said is to sell its rental subsidiary Hertz to a private equity group for $5.6 billion.
Ford plans to sell all of its Hertz shares to a private equity group composed of Clayton Dubilier & Rice, Carlyle Group and Merrill Lynch Global Private Equity.
Including debt, Ford valued the transaction at $15 billion, and said it expected the deal to close by year end.
The company can use the cash to fund new model initiatives and health-care liabilities.
In June, Hertz filed for an initial public offering, but buyout firms swooped in on Ford, giving the company a more compelling offer. By selling to buyout firms, Ford gets cash faster than waiting for an IPO and takes out the risks associated with the IPO market.
Ford drastically cut its profit forecast twice this year and is struggling with strong competition, soaring health-care and raw material costs, and a slide in US market share.