Reports: Dollar Thrifty shareholders reject Hertz deal; Avis offer could still be in play

Thursday, September 30, 2010

Reports: Dollar Thrifty shareholders reject Hertz

CHICAGO — Dollar Thrifty Automotive Group Inc. shareholders have reportedly rejected a buyout offer from Hertz, giving an opening for rival bidder Avis Budget Group’s offer for the car rental company.

The Wall Street Journal reported on its website Thursday that shareholders voted down Hertz’ proposal at a special shareholder meeting Thursday in Chicago. Dollar Thrifty’s board had said it preferred Hertz’s offer to one by Avis.

Hertz Global Holdings Inc. shares fell $1.12, or 9.7 percent, to $10.49 on the news.

Hertz was offering $43.60 in cash and 0.6366 shares of common stock of Hertz, for each share of Dollar Thrifty. Including restricted stock and stock options and cash, the offer is worth about $50.88 per share, or $1.56 billion.

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

Dollar Thrifty’s board had said it favors Park Ridge, N.J.-based Hertz’s bid over Avis’ offer, but the offer by Avis may have been more attractive to shareholders because it has more cash. 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.

Hertz said Wednesday that if its offer were rejected, it would not make any other offers for Dollar Thrifty. Avis then said it would continue to pursue a deal and it would pay a $20 million reverse termination fee if its deal went through for the Tulsa, Okla.-based company. Dollar Thrifty had cited lack of a breakup fee in Avis’ offer as a reason to prefer Hertz’s.

Representatives for all three companies did not immediately return messages Thursday seeking comment.

Hertz and Avis Budget Group Inc. 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.

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