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Avis: 'Substantially Higher Offer' to Dollar Thrifty

An interesting fight is brewing in the rental car industry: A couple of weeks back HertzGlobalHoldings agreed to buy Dollar ThriftyAutomotive Group in a $1.2 billion deal.

Now, in somewhat of a strange play, AvisBudget Group sent a letter to Dollar Thrifty regarding that proposed deal, sending shares of Dollar Thrifty up, as well as generating quite a bit of doubt amongst that company’s shareholders.

Yes, Avis may be right in asserting that Dollar Thrifty shareholders have not been given the opportunity to maximize value, but Avis is unclear about whether it will be able to follow through in that effort.

Avis can’t challenge for seats on Dollar Thrifty’s board because the time to do so passed a few weeks back and it is not currently contemplating litigation to throw out some of the provisions in the merger agreement that entrench the Hertz deal, preferring to let shareholders fight that battle.

In fact, Avis is letting shareholders wage its entire fight right now on the prospect that Avis will come through with its “substantially” higher offer if it has a “level playing field” for doing so.

While anti-trust risk is not insignificant for Hertz and Dollar Thrifty, it is certainly no better for Avis and may be even more onerous given it operates more prominently in the leisure rental car market. All reasons why this is a long way from a truly competitive bid.

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