Dollar Thrifty, Hertz agree to merger deal
BY JOHN STANCAVAGE World Business Editor
Monday, August 27, 2012
8/27/12 at 12:45 PM
Correction: A Monday Tulsa World story incorrectly stated the number of Dollar Thrifty Automotive Group employees in the Tulsa area. The company has 780 employees in the area. This story has been corrected.
A proposed $2.6 billion merger between Tulsa-based Dollar Thrifty Automotive Group and Hertz Global Holdings would produce $160 million in annual savings and additional sales opportunities for the two companies, officials said Monday morning.
The deal was announced late Sunday. Leaders of both companies held a conference call Monday to offer details.
Locally, interest focused on what kind of impact the deal would have on employment. Dollar Thrifty has about 780 people in the area. Hertz, meanwhile, has 1,700 in Oklahoma City.
The cost savings from the merger would include eliminating duplicate operations, officials said in the conference call. The process should take about two years, they said.
Dollar Thrifty CEO Scott Thompson told his employees in an email that he thinks Hertz will need the majority of the area work force to support the new business.
"We have been assured by Hertz that all of our people will be considered for positions. Our agreement with Hertz includes protection of your current compensation and benefits for a period of time, including severance for those who are not retained. I am sure that Hertz will want the best people in this very competitive industry. We have no information on Hertz's plans for the Tulsa operations, but my guess is that Hertz will benchmark the cost of functions in Tulsa against its Oklahoma City operations in determining where functions are located over the long term," Thompson said.
The merger has the approval of both boards, but is not a done deal. It still must receive federal antitrust approval. Bloomberg News also reported that Dollar Thrifty has 30 days to solicit better offers.
Still, the deal would end a long period of speculation in which various suitors, including Hertz, have been vying to buy Dollar Thrifty.
"The board has determined that the Hertz offer is compelling and in the best interest of our shareholders," Thompson said. "Accordingly, the board has decided to accept the offer in accordance to its fiduciary duty to our shareholders."
The merger has Hertz buying Dollar Thrifty stock at a price of $87.50 per share, Thompson said.
Dollar Thrifty has been in Tulsa since 1958 and has made its headquarters here since 1994. The company is estimated to have a payroll of about $100 million.
The Tulsa Metro Chamber had been among the local observers concerned about a merger with Hertz, particularly in light of that company's large Oklahoma City presence.
But Mike Neal, president and CEO of the chamber, said Sunday night in a statement that his group is looking forward to working with Hertz.
"The chamber welcomes Hertz as a new corporate partner in Tulsa and will aggressively work to ensure the company's integration plans result in positive protections for the Tulsa area work force," Neal said in a statement Sunday. "We will assist Hertz leadership during the transition by reinforcing the retention of the highly trained DTAG work force."
Hertz has been trying to acquire Dollar Thrifty, off and on, for two years. Dollar Thrifty shareholders rejected Hertz's 2010 bid to buy the company for about $1.2 billion. Hertz made another offer last year that it later withdrew, citing market conditions.
Shares of Dollar Thrifty closed Friday at $81, up $1.32. The stock is near its 52-week high of $84.91, set on July 9. Overall, Dollar Thrifty is up 15 percent since the beginning of the year.
Hertz closed at $13.15 on Friday, up 15 cents. The 52-week high for its shares was $16.64 on May 3.
Dollar Thrifty, the fourth-largest U.S. rental car company, employs 6,000 people companywide.
Hertz is the country's second-largest rental car operator. It's based in New Jersey, but its largest operations center - with 1,700 people - is in Oklahoma City. Hertz has 22,000 employees worldwide.
Hertz also announced Sunday that it has reached an agreement to sell its Advantage business to Franchise Services of North America and Macquarie Capital. FSNA is a rental car operator with subsidiaries including, among others, U-Save, Rent-a- Wreck, Practicar and X Press Rent-a-Car. The closing of that divestiture is conditioned upon, among other things, Hertz completing an acquisition of Dollar Thrifty.
Hertz Chairman and Chief Executive Officer Mark P. Frissora said: "We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy - but worthwhile - pursuit. We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies. The transaction provides Hertz instant scale with two new, well- established brands with airport concession infrastructure in the mid-tier value segment. 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. In addition, we look forward to moving efficiently and swiftly through the regulatory process having reached an agreement to divest our Advantage brand."
The combination provides Hertz with multiple strategic options to address both corporate and leisure business in all three tiers of the car rental market. The combined company would have enhanced leadership positions in key markets around the world, with combined annual earnings of $1.8 billion across approximately 10,000 locations globally.
Original Print Headline: Hertz, Dollar Thrifty agree to merge
Associated Images:
Dollar Thrifty Plaza, the headquarters for the Dollar Thrifty Automotive Group Inc.
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