Tags: US | Avis | Dollar | Thrifty

Dollar Thrifty to Consider Higher Offer From Avis

Wednesday, 05 May 2010 09:52 AM

Dollar Thrifty said Tuesday it will entertain a "substantially higher offer" for its assets from Avis Budget Group Inc. even as it slammed Avis for its letter criticizing Dollar Thrifty's planned sale to Hertz.

Avis Chairman and CEO Ronald Nelson released a letter Monday asking Dollar Thrifty Automotive Group Inc. to open its books so it can make a "substantially higher" offer to counter the $1.17 billion bid from Hertz Global Holdings Inc.

Hertz, the world's largest car rental company by locations, made the cash-and-stock bid for Dollar Thrifty last week in an effort to beef up its business among vacationers. The offer values the company at $41 per share.

The letter from Avis criticized Dollar Thrifty for not contacting Avis to discuss a rival bid even though Avis had expressed an interest in Dollar Thrifty. It also accused Dollar Thrifty of setting an unusually high breakup fee of 5.25 percent in order to deter competing bids.

In a statement Tuesday, Dollar Thrifty said Avis had "mischaracterized prior events and interactions between the two companies." It also said Avis erroneously calculated the breakup fee, which has been set at 3.5 percent of the transaction value.

"While it is Dollar Thrifty's policy not to comment on matters such as those to which the Avis Budget letter pertains, the company believed that a departure from its policy was necessary in light of the inaccuracies contained in Avis Budget's letter," Dollar Thrifty said.

News of the rival bids sent Tulsa, Oklahoma-based Dollar Thrifty's stock soaring Monday. On Tuesday, the shares rose 85 cents, or nearly 2 percent, to close at $51.55.

Dollar Thrifty recently posted a record first-quarter profit of $27.3 million.

Regardless of who ultimately acquires Dollar Thrifty, that expanded company will have to compete in an increasingly consolidated rental car market full of customers hoping to rent wheels for as little as possible.

The recent wave of consolidation in the car rental industry began in 2002, when Avis' parent company bought Budget. Enterprise's parent company acquired Alamo and National in 2007.

Hertz, based in Park Ridge, N.J., owns the Advantage rental car company and operates 8,100 locations in 147 countries. Its business, which had revenue of $7.10 billion in 2009, is roughly evenly split between business and vacation travelers.

Dollar Thrifty, whose customers are mostly vacationers hunting for cheap rentals, had revenue of $1.55 billion. Together, Dollar Thrifty and Hertz would have 9,800 rental locations.

Enterprise Holdings Inc., which has 7,600 Enterprise, Alamo and National sites and is based in St. Louis, raked in $12.9 billion in revenue last year. Avis, based in Parsippany, N.J., has 6,900 Avis and Budget locations and about $5.13 billion in revenue.

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Dollar Thrifty said Tuesday it will entertain a substantially higher offer for its assets from Avis Budget Group Inc. even as it slammed Avis for its letter criticizing Dollar Thrifty's planned sale to Hertz.Avis Chairman and CEO Ronald Nelson released a letter Monday...
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2010-52-05
Wednesday, 05 May 2010 09:52 AM
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