Hertz reaches 'material agreement' to divest Advantage
BY Staff and Wire reports
Friday, May 04, 2012
5/04/12 at 4:37 AM
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Hertz Global Holdings Inc., which has been trying to acquire Tulsa-based Dollar Thrifty Automotive Group Inc. for more than two years, said Thursday it reached a "material agreement" to divest its Advantage rental-car brand.
Selling Advantage is a key step toward getting antitrust clearance for a Dollar Thrifty acquisition, analysts have said.
"We have agreed on the material terms of a divestiture of our Advantage business with a potential buyer and have provided those terms to" the U.S. Federal Trade Commission, Hertz CEO Mark Frissora said on a conference call Thursday.
Dollar Thrifty, which employs about 700 in Tulsa, has been the subject of takeover interest for several years.
Scott Thompson, CEO of Dollar Thrifty, said the company would deal with a Hertz offer "if and when" anything materialized.
"Dollar Thrifty is a very successful standalone company and the only reason it would be sold is a compelling offer that in the opinion of the board of directors is in the shareholders long term best interest," Thompson said in a comment emailed to the Tulsa World.
For the moment, Dollar Thrifty "is focused on providing great customer service and driving earning per share," he said.
Hertz has been trying to divest the Advantage brand to help smooth approval to acquire Dollar Thrifty, the fourth-largest U.S. rental-car chain. That would solidify its position behind closely held Enterprise Holdings Inc., the largest U.S. car-rental company. The company has made "substantial progress" in obtaining antitrust approval, Frissora said.
In October, Hertz said it withdrew a hostile offer for Dollar Thrifty because of market conditions and the target company's share-repurchase program. Dollar Thrifty said Oct. 11 it wanted to take itself off the market and would begin to buy back as much as $400 million in shares after Nov. 1.
Hertz in October said it would continue to pursue FTC approval to buy Dollar Thrifty and would assess the proper offer price based on the buyback, market conditions and Dollar Thrifty's performance.
Hertz, based in Park Ridge, N.J., fell 3.5 percent to $15.66 at the close in New York. Dollar Thrifty rose 0.3 percent to $81.97. Dollar Thrifty has risen 17 percent this year, compared with a 34 percent gain for Hertz.
Dollar Thrifty shareholders rejected Hertz's takeover proposal in September 2010.
Hertz at the time called that bid "final" and said it would grow its Advantage brand to compete with Dollar Thrifty. But Hertz renewed its pursuit of the Tulsa company with an offer in May 2011.
Avis Budget Group also made an offer at one point but has been quiet lately about Dollar Thrifty.
Original Print Headline: Hertz reaches agreement to divest Advantage brand
The Tulsa World Business staff contributed to this story by Bloomberg News.