Dollar Thrifty Receives $1.33 billion Bid
Dollar Thrifty has fallen further into the battle over which other car hire company will buy them. On Wednesday, Avis Budget Group made the price war official by offering US$1.33 billion for the budget company. Their goal is to outdo Hertz Global Holdings in their US$1.2 billion cash and stock bid, which was offered earlier this year.
The bid from Avis values Dollar Thrifty at around US$46.50 per share, which is less than the company’s closing price of US$48.68 but nearly 20% more than what the shares were trading at in April. Hertz’s bid, however, only values Dollar Thrifty at US$41 per share.
Dollar Thrifty has said that they are reviewing the offer from Avis Budget, but they have already signed a definitive deal with Hertz. On September 16, the company’s shareholders are suppose to vote on the agreement. If Dollar Thrifty backs out of the deal they will have to pay a US$44.6 million termination fee, plus expenses.
There is more in it for Hertz to combine with Dollar Thrifty, as it will allow them to reach a new market of customers. The car rental firm is the biggest of the 3 companies, but they focus very heavily on the business travel market, so this deal will open the budget/leisure travel market for them. Avis, however, has already combined its operations with Budget, which is a lower cost car hire service.
Due to the announced bid from Avis, Dollar Thrifty shares declined US$0.08 to US$48.60 in pre-market trading. However, shares in Hertz rose US$0.11 to US$11.11, and Avis shares increased US$0.19 to US$11.27.
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