Dollar Thrifty to Work With Hertz for Antitrust OK

Dollar Thrifty Automotive will cooperate with Hertz to get antitrust clearance for Hertz's $2.25 billion acquisition offer for the smaller car-rental chain.


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ntitrust approval would give Hertz's bid an advantage over a rival overture from Avis Budget Group that has been stuck waiting for antitrust approval.

The announcement late Thursday comes just days after Hertz sweetened its offer for Dollar Thrifty in the hopes of besting Avis Budget. Hertz's new proposal Monday was worth $72 a share in cash and stock, about $2.25 billion.

Dollar Thrifty said in a statement Monday that its board would review Hertz's bid.

Hertz has been in atug-of-war with Avis Budget over Dollar Thrifty for a little more than a year, with both looking to snag the Tulsa, Okla., company because its clientele is largely leisure travelers. Hertz and Avis cater mostly to business travelers, so a Dollar Thrifty acquisition would automatically give either one broader appeal.

Hertz's revised bid was meant to appeal to Dollar Thrifty's stoenckholders. Dollar Thrifty shareholders stung Hertz in September when they rejected an offer that included $43.60 in cash and 0.6366 shares of common stock. Dollar Thrifty's board had recommended stockholders accept the deal.

At the time, industry experts speculated that Dollar Thrifty shareholders favored a deal with Avis because it was more money than Hertz had offered. Avis had offered $45.79 per share in cash and 0.6543 shares of Avis.

Dollar Thrifty had asked Avis in October not to make a formal offer so that the two companies could work together with antitrust authorities. Avis, based in Parsippany, N.J., agreed to wait.

In making its latest offer, Hertz said it would sell its Advantage brand. The Park Ridge, N.J., company said Monday that it was in talks with the Federal Trade Commission about how to close the deal quickly.

Hertz said its offer is not subject to any financing condition and would likely be paid for with cash on hand and new borrowings.

The potential Dollar Thrifty acquisition is a sign of the times within the car rental industry. The sector 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 is under 7 percent, according to IBISWorld.