The Chinese largest car rental firm, CAR Inc has announced the intention of one of its substantial shareholder, Hertz Holdings Netherlands, to sell part of its stake in the company.
Recent reports, however, indicate that Hertz Inc. a global Holding company has sold part of its stake in a Chinese rental company, CAR Inc. This comes barely three years since the holding company invested in the Chinese rental car business. Hertz Global Holdings Inc (NYSE:HTZ) invested in the Chinese-car business in 2013 April when it acquired a 19% stake in CAR-Inc. By doing so, Hertz hoped to drive greater business from China to other countries globally while getting more established in the country.
Why did Hertz sell its stake in the CAR Inc.?
The reason for the sale was not clear since the representative for Hertz did not respond to queries sent to him on email. It is important to note that this announcement by Hertz comes right after CAR Inc entered into an agreement to purchase 443,263 preferred shares of a rival car service. CAR Inc owns a 10% stake in UCAR group as of today, Thursday. This agreement is part of a package with CAR Inc’s chief executive and Haode Investment to acquire preferred shares in UCAR at US$550 million. Haode Investment is owned by CAR’s Chief Executives’ wife who already holds 22.4% of UCAR and 12.89% of CAR Inc.
After the sale, Hertz will still own about 13.6 percent of the company. It was agreed that the remaining interests in CAR-Inc will remain locked-up for 60 days after the sale to the 3rd party is sealed. This is according to a statement from the Hong Kong Stock Exchange.
What effect does this transfer have on CAR’s Share Value?
Hertz Global Holdings Inc (NYSE:HTZ) had agreed to transfer 59.57 million shares to a third party who remained undisclosed. This transfer was to be at a discounted price of HK$13.01 per share representing a 5.6% discount of Wednesday’s closing price. The sale has seen a slump in CAR’s shares in the Hong Kong Market at a rate of 7.3%. By 10:08 a.m., the shares were selling at HK$12.88.