AutoNation or CarMax could buy Hertz, analysts suggests

Hertz shares jumped after an analyst suggested car dealers AutoNation or CarMax could step in to buy the stricken auto-hire company out of bankruptcy.

Jefferies analyst Hamzah Mazari said: "Our channel checks suggest that KMX [CarMax] and AN [AutoNation] among others could be eyeing HTZ in bankruptcy."

Mazari said the most obvious route would be for the dealers to bid for 150,000 used cars that are likely to be sold by Hertz to pay lenders and shore up cash. Such a sale could raise $3bn (£2.4bn), he estimated.

Hertz shares soared 71% to $2.06 at 15:34 BST. The company filed for bankruptcy protection at the end of May after travel restrictions to halt the spread of Covid-19 caused global sales to collapse.

Mazari said another less likely outcome was car dealerships deciding there was value in Hertz's branch network. Hertz has 10,200 locations around the world including more than 3,000 in the US, many more than AutoNation with more than 300 in the US and CarMax with more than 200.

He noted that at the end of May, CarMax had about $660m of cash and $1.1bn of unused capacity on its revolving credit facility. The company has talked about "opening up and new buying channels" for investment. Mazari said.

"Keep in mind the car rental business is as much a used car dealership as it is a purely rental business," Mazari said.