Almost two years after the initial talks began, Hertz Global Holdings had finally come to an agreement to purchase Dollar Thrifty Automotive Group for $2.3 billion. The deal, announced late last night, almost never happened thanks to an appealing bid from Avis Budget Group. That competition was halted in June of last year after Avis purchased its European branch for $1 billion, effectively ending the pursuit for Dollar Thrifty.
Under the agreement, Hertz will pay $87.50 per share in cash for Dollar Thrifty, which was good for an eight percent premium at the time of the closing bell last Friday afternoon. Essentially, the deal hinges on Hertz selling off its Advantage Rent-a-Car branch to Macquarie Capital and another car rental franchiser known as Franchise Services of North America. However, if the deal falls through for whatever reason, neither Hertz nor Dollar Thrifty will be on the hook for any breakup fees whatsoever. This isn’t the first time Hertz has put in a bid in an attempt to claim ownership of Dollar Thrifty. More than two years ago, Hertz submitted a bid of around $1.2 billion, good for a share of about $41. As it turns out, Dollar Thrifty was looking for almost double the asking price originally submitted by Hertz. The wait was worth it, apparently, as Hertz’s chairman and CEO Mark P. Frissora expressed his content.
“We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy—but worthwhile—pursuit,” said Frissora in a statement released by Hertz. “We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies.” He added: “We’ll be a stronger global competitive player with a full range of rental options not only in the U.S. but in Europe and other markets given Dollar Thrifty’s strong international presence.”
Dollar Thrifty finally felt it got what it deserved too and was equally happy with the deal. The now-defunct rental car agency’s president and CEO, Scott Thompson said; “After three years of merger-related activity and speculation, I am pleased that we have reached a win-win transaction for both Hertz and Dollar Thrifty.”
Both rental car agencies have roots in Detroit, as Dollar Thrifty became its own entity in 1997 after leaving Chrysler. Hertz was acquired by Ford in the late 1980’s and later went public in 2005. The merger now represents Hertz ability to cater to all three major markets in the rental car segment. With its extensive range of models, Hertz will now offer your run-of-the-mill econo-boxes but will also feature classes all the way up to the high-end executive class.
Does this merger make you more likely to rent from Hertz? Less? Tell us what you think in the comment section below.
Source: New York Times, Hertz, Dollar Thrifty