Hertz Makes Another Big Offer To Buy Thrifty Car Rental
PARK RIDGE, N.J. -- Car rental company Hertz Global Holdings Inc. is raising the stakes in its pursuit of Dollar Thrifty Automotive Group Inc. in hopes of besting rival Avis Budget Group Inc.'s offer.
Dollar Thrifty, based in Tulsa, Okla., is considered a key prize for the two car rental companies because they cater to business travelers. Dollar Thrifty's clientele is largely the leisure traveler, giving either company a broader appeal.
Hertz said its new proposal is worth $72 a share in cash and stock. With 31.2 million shares of Dollar Thrifty outstanding, the bid would be worth more than $2.2 billion.
The revised offer would be slightly higher than Dollar Thrifty's closing price Friday of $69.69 a share.
In pre-market trading Monday, investors appeared to be betting that the bidding would go higher. Dollar Thrifty shares climbed $5.83, or 8.4 percent, to $75.52 in electronic trading ahead of the opening bell.
The new offer by Hertz includes $57.60 in cash and 0.8546 shares of its common stock. Its prior offer, rejected by Dollar Thrifty shareholders, included $43.60 in cash and 0.6366 shares of common stock.
Avis has made a competing offer for Dollar Thrifty that includes $45.79 per share in cash and 0.6543 shares of Avis.
Dollar Thrifty had asked Avis in October not to formally make its offer so that the two companies could work together with antitrust authorities. Avis, based in Parsippany, N.J., agreed to wait.
Calls were placed before business hours to Avis and Dollar Thrifty but no one was available for comment.
Hertz Chairman and CEO Mark Frissora said in a statement Monday that Avis has been in lengthy talks with the Federal Trade Commission over its offer "with no end in sight."
In making its latest bid, Hertz said it will sell its Advantage brand and is in talks with the FTC about how to close the deal quickly. The Park Ridge, N.J. company says its offer is not subject to any financing condition.
In a letter sent to Dollar Thrifty President and CEO Scott Thompson, Frissora said the transaction was "the highest priority for Hertz," and that its board and management team unanimously supports the transaction.
The car rental industry has been consolidating for years after hitting a peak of about $30 billion in revenue in 2007, according to research firm IBISWorld.
In 2002, Avis' parent company bought Budget, while Enterprise's parent company acquired Alamo and National in 2007.
In the U.S., Enterprise is the dominant player with 37 percent of the market, followed by Hertz at 20 percent. Avis Budget has a 17 percent share, and Dollar Thrifty has under 7 percent, according to IBISWorld.
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05/ 9/11 08:33 AM ET Associated Press