Dollar Thrifty shareholders reject Hertz deal, means Avis offer still a possibility

Dollar Thrifty shareholders reject Hertz deal

NEW YORK — Dollar Thrifty Automotive Group Inc. shareholders rejected a buyout offer from Hertz on Thursday against the recommendation of the company’s board.

The rejection likely takes Hertz out of the bidding for the car-rental chain and offers an opening for rival bidder Avis Budget Group.

Dollar Thrifty said 11.8 million votes were cast for the Hertz offer at a special shareholder meeting Thursday in Chicago, while 13.8 million shares were cast against the deal. There were 4,735 abstentions.

Dollar Thrifty’s board had said it preferred Hertz’s offer to one by Avis throughout much of the months-long bidding war. Dollar Thrifty CEO Scott Thompson said the company respects the vote of its shareholders. He did not mention Avis specifically but hinted the company is still open to deals.

“We will evaluate all of our options going forward in order to maximize value for Dollar Thrifty shareholders.”

It’s likely that shareholders simply wanted more money, and that’s what Avis’ offer represented, said Nima Samadi, lead car rental analyst for research firm IBISWorld. Hertz was offering $43.60 in cash and 0.6366 shares of common stock of Hertz Global Holdings Inc., for each share of Dollar Thrifty. Including restricted stock and stock options and cash, the offer was worth about $50.88 per share, or $1.56 billion.

Avis’ offer worth $53 per share is still on the table.

The board of the Tulsa, Okla.-based company most likely stuck with Hertz because it had a deal with them before Avis made its offers, Samadi said.

Now it’s unclear if Dollar Thrifty will accept Avis’ bid or Hertz will come back with a new one.

“Who knows? The way it’s going back and forth, you can’t predict anything,” Samadi said.

Hertz said the day before the vote the offer would be its last. On Thursday, CEO Mark P. Frissora said in a statement the company will now focus on its strategy of building its business away from airports.

Late Wednesday, Avis said it would continue to pursue a deal and it would pay a $20 million reverse termination fee if it went through. Dollar Thrifty had cited lack of a breakup fee in Avis’ offer as a reason to prefer Hertz’s.

Last week, Avis, based in Parsippany, N.J., increased its offer from $40.75 to $45.79 per share in cash and 0.6543 shares of Avis Budget for each share of Dollar Thrifty, a move expected as the bidding escalated.

Representatives at Avis did not immediately return a request for comment.

Hertz, based in Park Ridge, N.J., and Avis have been bidding for months over Dollar Thrifty, a key prize for the two car rental companies because they cater to business travelers, who are not traveling as much in the downturn. Dollar Thrifty’s clientele is largely the leisure traveler, a category of shopper still spending.

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. Total revenue in the car rental industry for 2010 will have dropped by $5 billion to $25 billion, the firm said.

In 2002, Avis’ parent company bought Budget, while Enterprise’s parent company acquired Alamo and National in 2007.

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, according to IBISWorld.

Hertz shares fell $1.02, or 8.8 percent, to $10.59 on Thursday. Dollar Thrifty shares rose 4 cents to $50.14, while shares of Avis rose 13 cents to $11.65.