FTC Said to Ready to Back Hertz-Dollar Thrifty Deal
By Sara Forden and Mark Clothier – Nov 15, 2012 12:01 AM ET
The U.S. Federal Trade Commission is prepared to approve Hertz Global Holdings Inc. (HTZ)’s $2.6 billion acquisition of Dollar Thrifty Automotive Group Inc. after the company agreed to shed more airport locations than it initially offered, four people familiar with the deal said.
To win antitrust clearance, Hertz said it would divest about 15 additional airport outlets including at Cleveland and Detroit, said the people, who asked not to be identified because the talks aren’t public. It isn’t known whether the agency’s commissioners have taken a final vote, two of the people said.
A draft statement announcing the approval is being circulated among the agency’s commissioners, one of the people said. Cecelia Prewett, a spokeswoman for the FTC, declined to comment on progress of the agency’s antitrust review of the deal.
To win antitrust clearance, Hertz consented to divest about 15 outlets in airports including Cleveland and Detroit, said the people, who declined to be identified because the talk aren’t public. Photographer: David Paul Morris/Bloomberg
Once completed, the transaction would bolster Hertz’s position as the No. 2 player in the U.S. rental-car market, enabling it to better compete with the industry leader, Enterprise Holdings Inc.
The Dollar Thrifty acquisition, led by Chief Executive Officer Mark Frissora, may be the last combination of major U.S. car rental companies that can win regulatory approval.
The U.S. Federal Trade Commission is prepared to approve Hertz Global Holdings Inc.’s $2.6 billion acquisition of Dollar Thrifty Automotive Group Inc. after the company agreed to shed more airport locations than initially offered, four people familiar with the deal said. Photographer: David Paul Morris/Bloomberg
Together, Hertz, Enterprise Rent-A-Car and Avis Budget Group Inc. (CAR) control about 75 percent of car rentals, with Dollar Thrifty holding 5 percent, according to a February report from IBISWorld. No other competitor has more than 1 percent of the $30.5 billion market in the U.S. this year, according to IBISWorld, the Santa Monica, California-based industry researcher.
Hertz, with 8,750 outlets worldwide, has more than 3,900 U.S. locations, while Dollar Thrifty has about 280 corporate- owned outlets in the U.S. and Canada.
The $87.50-a-share offer represents an 8 percent premium to Dollar Thrifty’s closing price of $81 (DTG) on Aug. 24. The price is more than twice the $41-a-share Hertz offered in April 2010.
Hertz began its pursuit of Dollar Thrifty in April 2007 and made a formal bid in 2010 of about $1.2 billion that Dollar Thrifty shareholders rejected. Park Ridge, New Jersey-based Hertz made another offer last year that it later withdrew, citing market conditions.
Hertz agreed to sell its Advantage brand to Franchise Services of North America Inc. and Macquarie Group Ltd. (MQG)’s Macquarie Capital. The purchase price was $16 million, one person with knowledge of the situation has said. The sale is dependent upon Hertz completing the acquisition of Tulsa, Oklahoma-based Dollar Thrifty.
Franchise Services, which operates the U-Save brand, is run by Co-Chief Executive Officer Sanford Miller, the CEO of Budget Group Inc. from 1997 to 2004.
Richard Broome, a Hertz spokesman, declined to comment.
Hertz and Dollar Thrifty said the transaction is a two-step process starting with a cash tender offer for all outstanding shares of Dollar Thrifty followed by a cash merger to acquire any remaining shares of common stock.
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