Patience pays as Hertz buys Dollar Thrifty
Source: Bloomberg News |
August 28, 2012, Tuesday
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Print Edition
Print Edition
HERTZ Global Holdings Inc, after more than five years of trying, struck a deal to buy Dollar Thrifty Automotive Group Inc for about US$2.6 billion in cash and secure its place as the No. 2 player in the US market.
The US$87.50-a-share offer represents an 8 percent premium to Dollar Thrifty's closing price of US$81 on August 24. It's more than double what Hertz offered a little more than two years ago.
The acquisition may be the last combination of major US car rental companies that regulators would tolerate. Hertz, Enterprise Rent-A-Car and Avis Budget Group Inc together control about 75 percent of the market, with Dollar Thrifty at 5 percent, according to a February report from IBISWorld. No other competitor has more than 1 percent market share, IBISWorld said.
Mark Frissora, Hertz chief executive officer, said in a statement: "We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy - but worthwhile - pursuit. We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies."
Based on 29.8 million shares outstanding, Dollar Thrifty is being acquired for an equity value of about US$2.6 billion. It will cost Hertz about US$2.3 billion after considering almost US$300 million in cash on Dollar Thrifty's balance sheet at the end of June, said Richard Broome, a Hertz spokesman. Dollar Thrifty traded below US$1 a share in March 2009.
Hertz began its pursuit of Dollar Thrifty in April 2007 and made a formal bid in 2010 of about US$1.2 billion that Dollar Thrifty shareholders rejected. Park Ridge, New Jersey-based Hertz made another offer last year that it later withdrew, citing market conditions.
Since that 2010 offer, Dollar Thrifty's shares have more than doubled, compared with a 9.1 percent increase in the Russell 2000 Index. Tulsa, Oklahoma-based Dollar Thrifty has traded at a premium to the index on a price-to-sales ratio since early last year.
"Hertz has made a compelling offer to our stockholders that reflects the strengths of our business and our team," CEO Scott Thompson said in a statement.
"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."
Hertz also said yesterday that it agreed to sell its Advantage brand to Franchise Services of North America Inc and Macquarie Group Ltd's Macquarie Capital. The purchase price was said to be US$16 million. The sale was dependent upon Hertz acquiring Dollar Thrifty.
The US$87.50-a-share offer represents an 8 percent premium to Dollar Thrifty's closing price of US$81 on August 24. It's more than double what Hertz offered a little more than two years ago.
The acquisition may be the last combination of major US car rental companies that regulators would tolerate. Hertz, Enterprise Rent-A-Car and Avis Budget Group Inc together control about 75 percent of the market, with Dollar Thrifty at 5 percent, according to a February report from IBISWorld. No other competitor has more than 1 percent market share, IBISWorld said.
Mark Frissora, Hertz chief executive officer, said in a statement: "We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy - but worthwhile - pursuit. We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies."
Based on 29.8 million shares outstanding, Dollar Thrifty is being acquired for an equity value of about US$2.6 billion. It will cost Hertz about US$2.3 billion after considering almost US$300 million in cash on Dollar Thrifty's balance sheet at the end of June, said Richard Broome, a Hertz spokesman. Dollar Thrifty traded below US$1 a share in March 2009.
Hertz began its pursuit of Dollar Thrifty in April 2007 and made a formal bid in 2010 of about US$1.2 billion that Dollar Thrifty shareholders rejected. Park Ridge, New Jersey-based Hertz made another offer last year that it later withdrew, citing market conditions.
Since that 2010 offer, Dollar Thrifty's shares have more than doubled, compared with a 9.1 percent increase in the Russell 2000 Index. Tulsa, Oklahoma-based Dollar Thrifty has traded at a premium to the index on a price-to-sales ratio since early last year.
"Hertz has made a compelling offer to our stockholders that reflects the strengths of our business and our team," CEO Scott Thompson said in a statement.
"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."
Hertz also said yesterday that it agreed to sell its Advantage brand to Franchise Services of North America Inc and Macquarie Group Ltd's Macquarie Capital. The purchase price was said to be US$16 million. The sale was dependent upon Hertz acquiring Dollar Thrifty.
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