Hertz buying Dollar Thrifty for about $2.3 billion

Hertz buying Dollar Thrifty for about $2.3 billion
NEW YORK (AP) — Hertz is one-step closer to its long-awaited prize.

More than two years after its original bid, it agreed Sunday to buy Dollar Thrifty Automotive Group Inc. for about $2.3 billion, giving it more ways to attract travelers and expand its international presence.

At $87.50 per share, the deal is worth far more than any of Hertz's previous bids and about 8 percent higher than Dollar Thrifty's closing price Friday.

Nothing will change immediately for consumers. Travelers that rent through Dollar Thrifty will still visit that counter for service. In the long run, prices in many markets will almost certainly rise as the two companies streamline their operations.

Media reports had said last week that Hertz Global Holdings Inc. of Park Ridge, N.J., was considering a new bid for Dollar Thrifty, a Tulsa, Oklahoma-based company it had pursued for two years.

The push-and-pull between two of the nation's largest car rental companies started in 2010. Avis Budget Group was also in the mix, pursuing a bid for Dollar Thrifty for more than a year.

Avis dropped its bid nearly a year ago citing market conditions. Then, in October of last year, Hertz dropped its bid, too. But Dollar Thrifty didn't trust that the years of attempts were over. In February, it extended its shareholder rights plan known as a "poison pill" — a maneuver designed to deter any unsolicited attempts to take over the company — through May 2013.

Hertz Chairman and CEO Mark P. Frissora said in a statement that the Dollar Thrifty buyout will give it access to two well-known rental car brands — Dollar and Thrifty — as well as make it a more competitive player in Europe and other markets overseas.

"We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy - but worthwhile - pursuit," he said.

Dollar Thrifty President, CEO and Chairman Scott Thompson said that the transaction is not only compelling for its stockholders but also will help broaden its reach.

"Hertz is the logical partner for us with the resources to expand our value focused leisure brands in key car rental markets around the world," he said.

Hertz anticipates that the acquisition will result in at least $160 million in annual cost savings, with additional sales growth opportunities.

Hertz is also selling its Advantage business to rental car company Franchise Services of North America and Macquarie Capital for undisclosed terms. The Advantage deal depends upon Hertz completing the Dollar Thrifty buyout.

Both Hertz and Dollar Thrifty's boards have unanimously approved the deal, which still needs antitrust clearance from the Federal Trade Commission. Hertz said it has stayed in close contact with the FTC to secure clearance and that Dollar Thrifty will fully cooperate with the process.

Hertz has about 8,650 corporate and licensee locations in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Dollar and Thrifty have approximately 280 corporate locations in the United States and Canada. The company also has about 1,300 franchise locations in 82 countries.

Hertz shares gained $1.46, or 11.1 percent, to $14.61 in midday trading Monday. Dollar Thrifty shares rose $5.99, or 7.4 percent, to $86.99.