Hertz Ends Hunt for Dollar Thrifty, Leaving Clear Path for Avis

Dollar Chairman Thomas Capo and CEO Scott Thompson
Dollar Thrifty Chairman Thomas Capo, center, and Chief Executive Officer Scott Thompson attend the special shareholders meeting. Photographer: Tim Boyle/Bloomberg

Hertz Global Holdings Inc. ended its attempt to acquire Dollar Thrifty Automotive Group Inc. after shareholders rejected the deal, clearing the way for Avis Budget Group Inc.’s $1.53 billion takeover offer.

Investors holding about 13.8 million shares voted against the $1.44 billion Hertz bid at a special meeting in Chicago yesterday, versus 11.8 million shares in favor. Hertz CEO Mark Frissora said in a statement that the company would cease all activities related to the Dollar Thrifty takeover and work to expand its Advantage brand and U.S. off-airport business.

Hertz’s exit clears the way for Parsippany, New Jersey- based Avis, which two days ago sweetened its offer with a $20 million breakup fee that Dollar Thrifty for weeks had asked it to add in case the proposal doesn’t win regulatory approval. Dollar Thrifty’s board had cited the lack of such a fee in rejecting the offer.

“We respect the vote of our shareholders, and remain confident in our ability to continue to deliver outstanding value for them,” Dollar Thrifty CEO Scott Thompson said in a statement. “We will evaluate all of our options going forward in order to maximize value for Dollar Thrifty shareholders.”

Thompson’s statement didn’t mention Avis by name.

Avis said yesterday in a statement that it will commence an exchange offer for Dollar Thrifty on its most recent terms within 10 days.

Dollar Thrifty rose 4 cents to $50.14 at 4:15 p.m. in New York Stock Exchange composite trading. Park Ridge, New Jersey- based Hertz fell $1.02, or 8.8 percent, to $10.59. Avis rose 13 cents, or 1.1 percent, to $11.65.

Avis Premium

Avis’s bid, valued at $53.41 a share at yesterday’s closing prices, represents a 51 percent premium to the average price of Dollar Thrifty’s shares in the 20 days before Hertz’s first offer. The average premium in acquisitions of auto- or equipment-rental businesses since 2005 was 17 percent.

Dollar Thrifty has gained 29 percent since the day before Hertz’s offer of $41 a share in cash and stock was announced in April. The shares traded for less than $1 as recently as March


Hertz and Avis have fought over Tulsa, Oklahoma-based Dollar Thrifty for about five months, in part because of the consolidation of the U.S. market. The four largest U.S. rental-car companies account for 81 percent of the industry’s revenue, according to IBISWorld.

Hertz Locations

Hertz is the largest worldwide airport car-rental brand, operating from more than 8,200 locations in 146 countries. Ford Motor Co. in December 2005 sold Hertz to Clayton Dubilier & Rice Inc., the Carlyle Group and Merrill Lynch’s buyout unit. The car-rental company raised $1.32 billion in an initial share sale less than a year later.

Citigroup Inc. and Morgan Stanley are providing financial advice to Avis, and Kirkland & Ellis LLP and Arnold & Porter LLP are acting as legal counsel.

Barclays Plc and Bank of America Corp.’s Merrill Lynch advised Hertz on its April offer, with Debevoise & Plimpton LLP and Jones Day providing legal advice. Dollar Thrifty was advised by JPMorgan Chase & Co., Goldman Sachs Group Inc. and law firm Cleary Gottlieb Steen & Hamilton LLP.

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