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Hertz offers $2.24 billion to buy Dollar Thrifty, topping Avis bid

May 09, 2011|Bloomberg News

Hertz Global Holdings Inc., the largest publicly traded rental-car company, offered to buy Dollar Thrifty Automotive Group Inc. for $2.24 billion in cash and stock Monday, topping a bid by Avis Budget Group Inc.

Hertz offered $72 a share, 24% more than Avis' offer, the Park Ridge, N.J.-based company said. Dollar Thrifty shares rose $9.58, or 14%, to $79.27, the biggest jump since May 3, 2010, when Avis proposed making a counter bid to Hertz's original offer.

Hertz aims to thwart the planned combination of Avis and Dollar Thrifty after having an earlier offer rejected. Since then, Parsippany, N.J.-based Avis and Dollar Thrifty, which has its headquarters in Tulsa, Okla., have been seeking U.S. Federal Trade Commission approval for a deal that would combine the third- and fourth-largest U.S. rental-car companies.

"I feel certain that this will not be the last act of the bidding process either," said Fred Lowrance, an analyst with Avondale Partners in Nashville. "I would expect to hear from Avis — FTC clearance or not — very soon."

Hertz's offer, which isn't subject to financing conditions, consists of $57.60 in cash and 0.8546 Hertz shares. Hertz said it has held discussions with the FTC and has begun selling its Advantage brand to facilitate approval.

Hertz said it decided to act after listening to Dollar Thrifty's and Avis' conference calls last week discussing their quarterly earnings and hearing little advancement with regulators.

Investors in Dollar Thrifty rejected a $1.44 billion offer from Hertz, the largest worldwide airport car-rental brand, on Sept. 30, providing an opening for Avis to buy the company. At the time, Hertz said the offer was its "best and final." The winning bidder would become the second-largest U.S. auto-rental chain by revenue, trailing closely held Enterprise.

Avis offered $45.79 and 0.6543 of its shares for Dollar Thrifty and, in early October, agreed to delay an exchange offer while the two began working toward regulatory approval. Avis also offered a $20-million breakup fee that Dollar Thrifty had requested.

Andrew Siegel, an Avis spokesman, declined to comment Monday.

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