Avis boosts Dollar Thrifty bid by more than $5 per share, one week before shareholder vote

Avis returns with a bigger bid for Dollar Thrifty

NEW YORK — Avis raised its offer for Dollar Thrifty to $1.52 billion in cash and stock Thursday, one week before a scheduled vote by shareholders on a bid from rival car rental company Hertz.

The latest offer from Avis values Dollar Thrifty at $53 per share, compared with a $50 per-share offer from Hertz.

The rental-car rivals are fighting for control of Dollar Thrifty, a chain known for lower rates that appeal to leisure travelers, to gain access to those customers.

The entire industry has been hammered by a drop-off in business car rentals and that has created a new urgency to capture leisure travelers and others that are still spending money to travel. The industry has also been consolidating for about a decade after hitting a peak of about $30 billion in revenue in 2007, according to research firm IBISWorld.

Avis’ prior offer was worth $1.36 billion, which included $40.75 per share in cash, and the same stock portion of .65 of Avis’ shares.

Avis, which is based in Parsippany, N.J., also appealed directly to Dollar Thrifty shareholders, who may decide the company’s fate in a matter of days.

“We believe it would be beneficial for Dollar Thrifty shareholders if the Dollar Thrifty Board of Directors engaged in a process to maximize value, rather than letting Hertz dictate timing and process,” Avis said in an open letter Thursday.

A larger bid from Avis had been expected ever since Dollar Thrifty Automotive Group Inc. accepted Hertz’ bid earlier this month. That offer was worth $1.56 billion including restricted stock and stock options and cash of $43.60 per share.

Avis’ new offer is worth $1.52 billion, based on 28.7 million shares outstanding.

The company boosted the cash portion of its offering by more than $5 per share to $45.79.

Dollar Thrifty, headquartered in Tulsa, Okla., scheduled a special shareholders meeting for Sept. 30 to vote on the Hertz offer.

Shares of Dollar Thrifty soared on the news, setting a new 52-week high of $53. Shares moderated later, rising 97 cents, or 1.9 percent, to $52.34.

Shares of Avis Budget Group Inc. fell 44 cents, or 4 percent, to $10.58, while shares of Hertz Global Holdings Inc. fell 42 cents to $10.45.

Avis said the increased bid was necessary “based on improving fundamentals in the industry and at Dollar Thrifty in particular.”

A $44.6 million reverse breakup fee is still in place with Hertz and Avis said it would offer more money if the break-up fee is removed.

The current tug-of-war is an extention of an industry reshaping that began almost 10 years ago. In 2002, Avis’ parent company bought Budget, while Enterprise’s parent company acquired Alamo and National in 2007.

The industry’s fate is closely tied to that of the airlines, which took a big hit during a global economic downturn in 2008.

Total revenue in the car rental industry for 2010 will have dropped by $5 billion compared with just three years ago, to $25 billion, according to estimates from IBISWorld.

In the U.S. market, Enterprise is the dominant player with 37 percent, followed by Hertz at 20 percent. Avis Budget has a 17 percent share, and Dollar Thrifty has under 7 percent, the firm said.