Car rental company Avis Budget Group said Thursday it is raising the cash portion of its bid for Dollar Thrifty as it battles Hertz for the potential buyout.
Avis said that it will increase the cash component to $40.75 per share from its previous offer of $39.25 per share. The bid also includes 0.6543 shares of Avis Budget Group Inc. stock.
Avis contends its new offer is a more than 22 percent premium over Hertz Global Holdings Inc.'s bid, which was valued at $1.17 billion. Avis' former cash-and-stock offer was valued at $1.33 billion.
Dollar Thrifty has a special shareholders meeting planned for Sept. 16 so its stockholders can vote on Hertz's bid. But Avis said it will increase its offer to Dollar Thrifty shareholders if the Hertz deal doesn't go through, boosting the bid by the amount of any reduction in the Dollar Thrifty break-up fee payable or paid to Hertz.
In morning trading, Dollar Thrifty shares rose 44 cents to $47.93, while Avis shares gained 45 cents, or 4.6 percent, to $10.20 and Hertz shares added 32 cents, or 3.5 percent, to $9.41.
Dollar Thrifty Automotive Group Inc., based in Tulsa, Okla., has favored working out a deal with Hertz, rebuffing a counteroffer from Avis last month. Dollar Thrifty has been concerned Avis may not get the approval of antitrust regulators and has been unhappy that Avis has been unwilling to offer a so-called "reverse termination fee."
But Avis, headquartered in Parsippany, N.J., said Thursday that "a reverse termination fee has nothing to do with certainty of closing."
"The Hertz deal is no more likely to be approved by the Federal Trade Commission simply because Hertz agreed in the context of a negotiated deal to pay a fee to Dollar Thrifty if it is not approved," Avis said in a statement.
Avis also had harsh criticism for Hertz regarding the antitrust concerns.
"Hertz resorts to antitrust as a scare tactic and a smoke screen — a last-ditch effort to deflect attention from its clearly inferior offer," the company said.
Hertz has said its bid would face fewer regulatory hurdles than an Avis offer because the Park Ridge, N.J.-based company doesn't operate a "value" brand such as Budget — that's the niche Hertz hopes to fill with Dollar Thrifty. It's already received the signoff from regulators in Canada.
Avis said both companies are cooperating with an ongoing FTC review and said it will sign a deal with Dollar Thrifty within five days of the Sept. 16 meeting if the Hertz deal is rejected by stockholders.
No matter which company eventually acquires Dollar Thrifty, the expanded business will have to compete in an increasingly consolidated rental car market full of customers hoping to rent wheels for as little as possible as economic conditions remain unstable.
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