Hertz and Avis Fight for Takeover of Dollar Thrifty Car Rentals

It appears that Hertz Global Holdings has won its war against Avis Budget Group for control of Dollar Thrifty Car Rentals. Hertz is the largest car rental company in the world based on the number of locations it has. The firm operates more than 8,200 locations in 146 countries. With the acquisition of Dollar, the company would have a total of 9,800 stores.  Ford Motor Company had owned the business, but sold it to Clayton Dubilier & Rice, Inc., the Carlyle Group and Merrill Lynch in 2005.

Reports are that Hertz is paying $1.43 billion in stock and cash to Dollar. Although some publications like the Washington Post and Businessweek are saying that Hertz is paying $1.56 billion. Hertz has also agreed to sell its Advantage Rent-a-Car division to satisfy antitrust issues. 

The Board of Directors of Dollar Thrifty accepted Hertz's offer, but the company's shareholders will be voting on the offer on September 30. Dollar Thrifty said that it was turning down the Avis offer due to antitrust concerns and that the agreement did not include deal protection procedures. Moreover, Dollar feared that Avis could not win approval of an acquisition because of antitrust issues. Avis owns Budget Rent A Car and it shares a similar market with Dollar of airport car rentals targeted toward leisure travelers. 

Dollar Thrifty's stock rose $2.57 or 5.4 percent to $50.58 while Hertz stock jumped 79 cents or 7.9 percent to $10.84 on Monday, September 13 when the deal was announced. 

Analysts say that the acquisition should help Hertz in its battle with competitors Avis and Enterprise Holdings. Enterprise owns Alamo and National and has a total of 7,600 rental sites. 

The rent-a-car industry has been experiencing a number of mergers since 2002. Prior to the Hertz-Dollar deal, Avis' parent company acquired Budget in 2002 and Enterprise's parent firm bought Alamo and National in 2007. A Hertz spokesperson said that the deal is expected to close by the end of this year and that Hertz's sale of Advantage should be complete by then.