05/10/2011 04:38:00 PM EST
Hertz Takes Another Bite at the Dollar Apple
Hertz announced this morning that it was giving the
acquisition of Dollar Thrifty another go. You'll remember that last year,
Dollar terminated its agreement with Hertz after Dollar
shareholders voted no on its $50/share offer. The sharehodler vote
followed sharehiolder litigation in Delaware to try to get the deal protections
in the Hertz-Dollar deal invalidated (In re Dollar Thrifty), resulting in a termination of the
merger agreement. Following which Dollar and Avis entered into protracted
- and so far unsuccessful = talks amongst themselves and the antitrust
authorities about getting a deal done.
Apparently, Hertz has decided enough is enough and has
decided to jump back in - hoping that Dollar shareholders will think
differently this time around. Here's a summary of the new offer from the Hertz press release:
Hertz will offer Dollar Thrifty shareholders $72.00 per
share (based on Hertz's closing stock price on May 6, 2011), consisting of
$57.60 in cash and 0.8546 shares of Hertz. The offer represents:
* a 26% premium and 18% premium to
Dollar Thrifty's 90-day and 60-day average share price, respectively;
* a 7.6x multiple of Dollar Thrifty's LTM
EBITDA for the period ended March 31, 2011; and a 24% premium to the value of the entirely hypothetical
price announced by Avis Budget Group, Inc. ("Avis Budget") over seven months
In an e-mail to employees, Hertz's CEO Mark Frissora
provides a little more information about their reasons for giving the
acquisition of Dollar one more try.
You may wonder why we are moving forward now after the
unsuccessful Dollar Thrifty shareholder vote last fall. First, the
vote did not prevent Hertz from re-engaging at any time of our
choosing. Additionally, economic conditions continue to improve,
creating revenue growth opportunities over the next several
years. Moreover, Avis has been trying unsuccessfully for the past 12
months to secure government approval to buy Dollar Thrifty and all they have to
show for their year-long efforts are "constructive discussions" with U.S.
regulators. We don't believe Avis can get a deal done and the time
is right to resolve this matter once and for all to our and Dollar Thrifty's
In contrast with Avis, we've picked up where we left off
with the government last fall and we are confident we can secure its consent to
proceed. Unfortunately, that will mean divesting Advantage
Rent-a-Car in the U.S., which is not our preference, but it's clear that a
merger with Dollar Thrifty becomes far more difficult if the government opposes
For its part, Hertz appears to be taking an aggressive
stance towards offering Dollar's shareholders a deal they can't refuse.
It's offering an improved bid and is committing to sell its
Advantage rental brand (e-mail to Advantage employees)- to help clear the way for
regulators to provide clearance to the proposed transaction. We'll see how Dollar
II proceeds and whether shareholders have a different view on the transaction
given what they've seen over the past few months.
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