Sept. 12 (Bloomberg) -- Ford Motor Co. may sell Hertz Corp., the largest U.S. car-rental company, to buyout investors including Clayton, Dubilier & Rice Inc. and Carlyle Group for about $15 billion to raise cash for its unprofitable North American auto business, people familiar with the matter said.

Clayton Dubilier of New York and Washington-based Carlyle, along with Merrill Lynch & Co.'s private-equity unit, have offered to pay $5 billion for Hertz and assume about $10 billion of debt, said the people, who declined to be identified. A deal may be announced as soon as today. It would be the largest leveraged buyout since Kohlberg Kravis Roberts & Co. paid $31 billion for RJR Nabisco Inc. in 1989.

Ford, the No. 2 U.S. automaker, is selling Park Ridge, New Jersey-based Hertz to raise cash as it loses market share to rivals led by Toyota Motor Corp. Ford's North American business has been unprofitable for three of the past four quarters. Chief Executive Officer William Clay Ford Jr. has promised to increase earnings.

``They've decided it's a non-core business,'' Burnham Securities Inc. analyst David Healy said of Ford, which is based in Dearborn, Michigan. The sale would be ``a big boost'' for Ford's liquidity, he said.

Clayton Dubilier spokesman Tom Franco, Carlyle spokesman Chris Ullman and Merrill spokeswoman Terez Hanhan declined to comment. Ford spokeswoman Becky Sanch and Hertz spokesman Richard Broome also declined to comment.

Hertz rents cars from 7,400 locations in more than 150 countries. The company's net income more than doubled last year to $365.5 million. Revenue was $6.7 billion. Ford earned $3.49 billion on net sales of $171.7 billion in 2004.

IPO Was Planned

Ford has owned all of Hertz since 2001, when it spent $707 million to buy back an 18.5 percent stake that it had sold to the public four years earlier. Ford had considered selling shares of Hertz in an initial public offering before deciding to accept takeover bids.

Hertz has been in the car-rental business since 1918 and in the equipment rental business for more than 40 years. It has partnerships with more than 60 airlines, railroads and hotel chains throughout the world, as well as with credit-card company American Express Co. and Internet travel company Expedia.

Ford has sold units for about $1.6 billion since January 2002, including the U.K.-based Kwik-Fit auto-repair chain for 330 million pounds ($606 million). The proceeds have been put into automotive operations, Don Leclair, Ford's chief financial officer, said on April 20. Asked then what other assets the company could sell, Leclair said, ``Not much.''

Blackstone, Texas Pacific

``Hertz was an important outlet for Ford cars until a few years ago,'' Healy said. ``They pared back delivery to rental companies'' because such sales aren't profitable for automakers.

Clayton Dubilier and its partners have been bidding for Hertz against a group that includes New York-based Blackstone Group LP, Texas Pacific Group of San Francisco, and Thomas H. Lee Partners LP and Bain Capital Partners LLC, both of Boston, said the people familiar with the matter. Blackstone spokesman John Ford declined to comment. Texas Pacific spokesman Owen Blicksilver, Bain spokesman Alex Stanton and Thomas H. Lee, the firm's chief executive, didn't return calls seeking comment.

Buyout firms have been joining forces this year to make bigger acquisitions. SunGard Data Systems Inc. of Wayne, Pennsylvania, whose software handles most Nasdaq Stock Market trades, was acquired last month by seven firms, including New York-based KKR and Blackstone, for $11.4 billion.

Biggest Deal

LBO firms have announced a record $191 billion of acquisitions this year, data complied by Bloomberg show. Carlyle raised $7.85 billion in March for the biggest U.S. buyout fund and New York-based Blackstone has received commitments of $12.5 billion for a global fund.

The deal would be the largest undertaken by Carlyle, Clayton Dubilier or Merrill Lynch Global Private Equity, which is based in New York. Carlyle's biggest buyout was in November 2002 when, along with New York-based Welsh Carson Anderson & Stowe Inc., it paid $7.05 billion for Dex Media Inc., a U.S. phone book publisher. Arthur Levitt, a board member of Bloomberg LP, the parent of Bloomberg News, is a senior adviser to Carlyle.

Clayton Dubilier's largest buyout came in March 2005, when it purchased electrical-products supplier Rexel SA for 3.7 billion euros ($4.6 billion) with Eurazeo and Merrill Lynch's buyout unit.

Buyout investors use a combination of equity and debt to make acquisitions. They prefer companies like Hertz that generate reliable cash flows that can be used to pay off the debt they take on to finance acquisitions. Alamo Rent A Car and National Car Rental are owned by the buyout unit of Cerberus Capital Management LP, a New York investment firm.

Ford is being advised on the Hertz deal by Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. The buyout group is being advised by Lehman Brothers Holdings Inc., Deutsche Bank AG and Merrill.

To contact the reporters on this story: Brett Cole in New York at coleb@bloomberg.net; Bill Koenig in Southfield, Michigan at wkoenig@bloomberg.net.

Last Updated: September 12, 2005 00:28 EDT