(Updates with closing share price in fifth paragraph.)
June 6 (Bloomberg) -- Dollar Thrifty Automotive Group Inc., the rental-car chain being sought by two larger competitors, recommends investors not tender shares to Hertz Global Holdings Inc. because the $72-a-share bid undervalues the company.
“Hertz’s current offer does not represent a fair split of the economic value created by the combination of Dollar Thrifty Automotive Group and another large rental-car operation,” Chief Executive Officer Scott Thompson said in an e-mailed statement. “Our significant operating cash flow, cash-rich balance sheet, proven brands, combined with our synergistic and scarcity value is clearly more than $72 a share.”
Hertz and Avis Budget Group Inc., the two largest publicly traded rental-car chains, have been bidding for Tulsa, Oklahoma- based Dollar Thrifty, the third biggest, since April 2010. Avis and Dollar Thrifty have been seeking U.S. Federal Trade Commission approval for a merger since October, after shareholders rejected an offer from Hertz. The agency is also reviewing Hertz’s most recent bid.
Hertz offered last month to pay $57.60 in cash and 0.8546 of a Hertz share for each Dollar Thrifty share outstanding, a proposal then valued at $72. Analysts have said bidding could drive Dollar Thrifty as high as $100 a share.
Dollar Thrifty fell $1.91, or 2.3 percent, to $81.83 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest daily percentage drop since Sept. 24. Hertz, based in Park Ridge, New Jersey, had said that day that its bid at the time of $50.70 a share was its “best and final” offer.
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