Bloomberg News

Dollar Thrifty Declines After Calling an End to Sale Process

October 11, 2011

(Updates with CEO call in ninth paragraph.)

Oct. 11 (Bloomberg) -- Dollar Thrifty Automotive Group Inc., the car-rental company that has been the target of 18 months of bidding, fell 2 percent after it said Hertz Global Holdings Inc. didn’t meet its bid requirements by a deadline yesterday.

The Hertz offer failed to protect against possible antitrust objections, Dollar Thrifty said in a statement. Dollar Thrifty said it plans to begin a $400 million repurchase program after Nov. 1. Shares slid to $59.19 at the close in New York. Hertz rose 1.4 percent to $10.22.

The lack of an improved offer leaves Dollar Thrifty, once the target of a bidding war between Hertz and Avis Budget Group Inc., looking for other ways to thrive independently, such as a $400 million stock-repurchase plan. Hertz is still interested, according to Rich Broome, a spokesman for the Park Ridge, New Jersey-based company.

Hertz has been seeking U.S. Federal Trade Commission approval to buy Tulsa, Oklahoma-based Dollar Thrifty, the fourth-largest U.S. rental-car chain. It’s trying to divest its Advantage brand to help smooth that approval. Hertz has wanted to buy Dollar Thrifty to keep its position behind Enterprise Holdings Inc., the largest U.S. car-rental company.

“If Hertz shows up with a bid, Dollar Thrifty has a fiduciary duty to look at it,” Fred Lowrance, a Nashville, Tennessee-based analyst at Avondale Partners LLC, said in an e- mail. “Dollar Thrifty shareholders are not going to be happy with an accelerated share repurchase program if there is even a hint that Hertz is still working toward antitrust clearance.”

Lone Suitor

Dollar Thrifty said it expects to complete share repurchases of as much as $100 million a quarter over the next four quarters.

“Having received no acceptable offer after conducting an unprecedentedly open process with clearly articulated requirements, it is time for us to move forward on a stand-alone basis,” Dollar Thrifty Chief Executive Officer Scott Thompson said in a statement.

Hertz, the second-largest U.S. car-rental company, was Dollar Thrifty’s lone suitor after Avis dropped its pursuit Sept. 14. Dollar Thrifty told Hertz and Parsippany, New Jersey- based Avis in letters dated Sept. 6 it wanted final bids submitted by 5 p.m. New York time yesterday. Hertz has yet to increase its offer.

Oct. 7 Call

Hertz Chief Executive Officer Mark Frissora told Thompson by telephone on Oct. 7 that his company would not submit a proposal by yesterday’s deadline, according to a Dollar Thrifty regulatory filing today. Hertz affirmed its “commitment to pursuing an acquisition” of Dollar Thrifty and its goal was “to obtain antitrust regulatory clearance” by the end of the year, the filing said.

Dollar Thrifty said in its statement earlier today its board will “review and consider” any changes to the Hertz offer “or any other proposals that may be made by Hertz or others.”

The four biggest car-rental chains make up 83 percent of the U.S. market, according to a September report from IBISWorld, the Santa Monica, California-based industry researcher.

Closely held Enterprise had a 40 percent share, followed by Hertz with 20 percent and Avis with 17 percent. Dollar Thrifty accounted for 5.7 percent of the industry’s sales, IBISWorld said.

Dollar Thrifty shareholders rejected Hertz’s offer in September 2010. Hertz, after calling that bid “final,” renewed its pursuit in May with an offer valued at $1.92 billion, or $66.33 a share, as of today’s close. Dollar Thrifty recommended on June 6 that investors not accept Hertz’s bid because it undervalued the company.

--Editors: Bill Koenig, Jamie Butters

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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