Skift Take

The multiyear-merger maneuverings between Hertz, Dollar-Thrifty, and Avis Budget almost make American Airlines' merger scenarios appear tame.

Hertz Global Holdings is nearing an agreement to acquire Dollar Thrifty Automotive Group for around $2.5 billion, sources familiar with the matter said on Saturday, potentially ending years of an on-again-off-again takeover battle involving the U.S. rental car companies.

Under the terms of a deal that is expected to be announced in coming days, Hertz could buy Dollar Thrifty for $87.50 per share, the sources said.

The price would represent a premium of around 8 percent to Dollar Thrifty’s Friday closing price of $81 per share, and more than double than the $1.2 billion offer Hertz started off with in April 2010.

The two companies are in continuing discussions and there is no guarantee an agreement will be reached, said the sources, who asked not to be named because the matter is not public.

Representatives of Hertz and Dollar Thrifty were not immediately available for comment on Saturday.

A combination of Hertz and Dollar Thrifty would end a protracted and contentious takeover saga in which the Avis Budget Group also tried to acquire Dollar Thrifty, the fourth-largest car rental company in the United States.

Hertz, the No. 2. U.S. car rental company, and third-ranked Avis have made several offers for Dollar Thrifty in the past few years, but the process has been stalled by disagreements over price and doubts over whether its larger rivals can get regulatory clearance for a merger.

A Dollar Thrifty purchase by Hertz would leave the merged company, Avis Budget and privately held Enterprise Holdings — the No. 1 car rental company — controlling about 95 percent of the U.S. car rental market.

Park Ridge, New Jersey-based Hertz has agreed to sell its budget brand Advantage, which caters to the same market as Dollar Thrifty, and said earlier this month that it remains in talks with the Federal Trade Commission to win regulatory approval for a potential merger.

Hertz was always seen the more likely to win regulatory clearance than Avis as it serves the high-end rental market.

Avis dropped out of the race for Dollar Thrifty last year after it bought Avis Europe for about $1 billion. Hertz put its offer on hold around the same time, saying it would wait for antitrust approval before making a final bid.

But Dollar Thrifty, the last big prize in an industry that has consolidated rapidly in recent years, urged Hertz earlier this month to put an end to the years of fruitless takeover offers by making a compelling bid or letting it proceed as a standalone company.

Several top Dollar Thrifty shareholders told Reuters earlier this week that they would accept a takeover offer from Hertz that values the company at more than $87 per share, or $2.4 billion.

At one point during the financial crisis in 2008, Hertz offered to buy Tulsa, Oklahoma-based Dollar Thrifty for $2 per share. The car rental industry, tied closely to airline traffic and hotel bookings, has since experienced strengthening demand due to recovering business travel in the United States and shares of car rental companies have rallied sharply in recent years.

With the acquisition of Dollar Thrifty, Hertz would narrow the gap with Enterprise, which owns Alamo and National Car Rental.

(Additional reporting by Mark Weinraub in Chicago; editing by Vicki Allen and Mohammad Zargham)


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Tags: avis budget, dollar car, hertz, thrifty

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