Hertz Global Holdings, Inc. announced an exchange offer for all outstanding shares of Dollar Thrifty Automotive Group, Inc. Hertz will offer Dollar Thrifty shareholders $72 per share (based on Hertz's closing stock price on May 6, 2011), consisting of $57.60 in cash and 0.8546 shares of Hertz. The deal could be worth $2.24 billion.
Hertz said the offer represents a 26 percent premium and 18 percent premium to Dollar Thrifty's 90-day and 60-day average share price, respectively, and a 24 percent premium to the value of the entirely hypothetical price announced by rival Avis Budget Group, Inc. that was made seven months ago.
Hertz said the premiums are substantial, especially after taking into account the significant takeover speculation premium already included in Dollar Thrifty's current stock price.
Hertz also said the proposal offers immediate and superior value as well as deal certainty to Dollar Thrifty shareholders. Moreover, it is a firm offer, in contrast to the entirely hypothetical Avis Budget transaction. Hertz's offer is not subject to any financing condition or contingency, Hertz said.
The combination of Hertz and Dollar Thrifty would create a global, multi-brand rental car leader offering customers a full range of rental options through its market leading brands.
Commenting on the offer, Hertz Chairman and CEO, Mark P. Frissora said, "We believe that the acquisition of Dollar Thrifty by Hertz would be in the best interests of both companies' shareholders and of rental car consumers, and that it will accelerate Hertz's growth opportunities by leveraging the combined brand portfolio and unparalleled value and service reputations of both companies. To this end, we have today made a superior bid. We are seeking a consensual business combination with Dollar Thrifty, and are proceeding on an accelerated timetable in order to provide immediate and certain value to Dollar Thrifty shareholders."
Commensurate with Hertz's desire to expeditiously close this transaction, Hertz said it is engaged in discussions with the Federal Trade Commission (FTC) and has commenced a process for the divestiture of its Advantage brand. Hertz is highly confident that it will obtain FTC clearance for its acquisition of Dollar Thrifty and is committed to a fast path forward.
Frissora added, "We have always known that antitrust considerations would be pivotal in any transaction with Dollar Thrifty, and that a combination of Avis Budget and Dollar Thrifty would face serious antitrust obstacles. Avis Budget has been unable to produce a viable antitrust remedy, despite an entire year of discussions with the FTC with no end in sight. In contrast, we are confident we can deliver a compelling proposal to the FTC centered around the divestiture of our Advantage brand, and are committed to working proactively to move through this process as quickly as possible."
This transaction is the highest priority for Hertz and has the unanimous support of our Board of Directors and management team, Frissora said.
Hertz approached Dollar Thrifty last year with an offer estimated at $1.5 billion. Shareholders of Dollar Thrifty rejected the offer, paving the way for a deal with the Avis Budget Group. The Avis Budget deal, which has been valued at roughly $1.8 billion, has been in limbo as it waits for approval from the FTC.
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