In a battle of the giants in the global car rental industry, the Avis Budget Group, Inc. sent a letter to the Board of Directors of Dollar Thrifty Automotive Group, Inc. with a unsolicited $46.50 per share offer— in cash and stocks— to acquire the company that Hertz is also seeking to buy. One media estimate reports the Avis' offer is worth approximately $1.3 billion while the Hertz's offer is for an estimated $1.2 billion.
In a letter from Ronald L. Nelson, Avis Budget Group chairman and CEO, sent to Dollar Thrifty’s Chairman, Thomas P. Capom, Nelson said they “continue to believe that a combination with Avis Budget presents a compelling opportunity for our respective stakeholders and the prospect for your shareholders to obtain the highest value for their investment. Our offer is for $46.50 per share of Dollar Thrifty common stock consisting of $39.25 in cash (which would include the proceeds of a pre-closing special dividend to be paid by Dollar Thrifty consistent with the Hertz proposal) and 0.6543 shares of Avis Budget stock (currently valued at $7.25). “
The cash portion of the offer will be funded through a combination of available cash and fully committed financing, Avis Budget Groups said, while the stock portion of the offer will afford Dollar Thrifty shareholders the opportunity to “participate in the combination-related synergies and benefit from the continued positive trends in the industry.”
“Our offer is not subject to any financing or due diligence contingencies and has the unanimous support of the Avis Budget Board of Directors,” Avis Budget said.
Hertz Global Holdings, Inc. and Dollar Thrifty executed a definitive merger agreement on April 25, 2010, according to The Wall Street Journal, and the company continues to be bound by the terms of that agreement. Hertz filed a preliminary proxy statement/prospectus with the Securities and Exchange Commission (SEC) on May 25, 2010.
Dollar Thrifty confirmed receipt of the letter and said it has scheduled a special meeting of shareholders on September 16, 2010 for a vote. The Dollar Thrifty board of directors will review and consider the terms of the Avis Budget proposal in accordance with its fiduciary obligations to shareholders and consistent with the company's commitments under the Hertz merger agreement, Dollar Thrifty said.
“We are prepared to enter into a merger agreement that contains substantially the same terms as the Hertz merger agreement, but which includes removing the matching rights, eliminating the break-up fees, and increasing the commitment to secure antitrust approvals,” Avis Budget said.
“ In short, we believe that the higher purchase price we are offering, combined with the terms of our proposed merger agreement, makes our offer a superior one from the perspective of Dollar Thrifty and its shareholders,” Avis Budget said.
“Given our willingness to enter into a merger agreement with these terms, Hertz should be required to agree to accept these provisions as a condition to Dollar Thrifty permitting Hertz to continue to make offers for the company. The Dollar Thrifty Board has the right and obligation to require acceptance by Hertz of these provisions in connection with any further consideration of offers from Hertz,” Avis Budget Group said,