After Long Pursuit, Hertz to Buy Dollar Thrifty for $2.3 Billion
Rental car company Hertz is buying its rival Dollar Thrifty Automotive Group Inc. for approximately $2.3 billion, giving it more ways to attract business and leisure travelers and an expanded international presence.
Dollar Thrifty’s stock jumped 7 percent in premarket trading Monday.
Hertz Global Holdings Inc. said late Sunday that it will pay $87.50 for each Dollar Thrifty share. That’s an 8 percent premium to the company’s closing price of $81 per share on Friday.
Media reports had said last week that Hertz of Park Ridge, N.J., was considering a new bid for Dollar Thrifty, a Tulsa, Oklahoma-based company it had pursued for two years.
The push-and-pull between two of the nation’s largest car rental companies started in 2010. Avis Budget Group was also in the mix, pursuing a bid for Dollar Thrifty for more than a year.
Avis dropped its bid nearly a year ago citing market conditions. Then in October of last year, Hertz dropped its bid, too. But Dollar Thrifty didn’t trust that the years of attempts were over. In February, it extended its shareholder rights plan known as a “poison pill” — a maneuver designed to deter any unsolicited attempts to take over the company — through May 2013.
Hertz Chairman and CEO Mark P. Frissora said in a statement that the Dollar Thrifty buyout will give it access to two well-known rental car brands — Dollar and Thrifty — as well as make it a more competitive player in Europe and other markets overseas.
“We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy - but worthwhile - pursuit,” he said.
Dollar Thrifty President, CEO and Chairman Scott Thompson said that the transaction is not only compelling for its stockholders but also will help broaden its reach.
“Hertz is the logical partner for us with the resources to expand our value focused leisure brands in key car rental markets around the world,” he said.
Hertz anticipates that the acquisition will result in at least $160 million in annual cost savings, with additional sales growth opportunities.
Hertz is also selling its Advantage business to rental car company Franchise Services of North America and Macquarie Capital for undisclosed terms. The Advantage deal depends upon Hertz completing the Dollar Thrifty buyout.
Both Hertz and Dollar Thrifty’s boards have unanimously approved the deal, which still needs antitrust clearance from the Federal Trade Commission. Hertz said it has stayed in close contact with the FTC to secure clearance and that Dollar Thrifty will fully cooperate with the process.
Hertz has about 8,650 corporate and licensee locations in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Dollar and Thrifty have approximately 280 corporate locations in the United States and Canada. The company also has about 1,300 franchise locations in 82 countries.
Shares of Dollar Thrifty gained $5.65, or 7 percent, to $86.65 before the market open.