Hertz agrees to sell more locations to get Dollar Thrifty deal OK'd
BY Staff and Wire reports
Tuesday, November 13, 2012
11/13/12 at 6:49 AM
Find all the stories about the Tulsa-based rental car company and possible mergers.
Hertz Global Holdings Inc. has agreed to shed more airport locations, which may lead the Federal Trade Commission to allow the $2.3 billion acquisition of Dollar Thrifty Automotive Group Inc. to go forward, two people familiar with the negotiations said.
The FTC indicated it's willing to approve the transaction on the condition that Hertz sell at least a dozen extra airport counters in order to make sure the deal doesn't limit competition in the rental-car market, Bloomberg News reported. Its sources asked not to be identified because the negotiations aren't public.
The acquisition had met resistance at the FTC over the market share the combined company would command at airports, people familiar with the matter have said. Hertz, with 8,750 outlets worldwide, has more than 3,900 U.S. locations, while Tulsa-based Dollar Thrifty has about 280 corporate-owned outlets in the U.S. and Canada.
"It kind of feels like its heading to a conclusion," Chris Agnew, a Stamford, Conn.-based analyst at MKM Partners LLC, said in an interview with Bloomberg.
"I had fairly high confidence that there might be the perception that going from four companies to three is bad, but this industry is competitive location by location, so this still will be a competitive business."
Last month, Hertz extended the FTC's legal deadline for ruling on the deal to Nov. 16 from Oct. 31 because the agency hadn't finished its review of information provided by the companies, Park Ridge, N.J.-based Hertz said in a statement. When Hertz announced the proposed $87.50 a share acquisition on Aug. 26, it said FTC approval was expected by mid-October.
Talks about 12 or more airport divestitures follow Hertz's agreement to sell its Advantage brand to Franchise Services of North America Inc. and Macquarie Capital. While the FTC staff has raised concerns about the strength of the buyer and its ability to become a viable competitor, those questions weren't a deal-breaker with regulators, the people said.
The bureaus of competition and economics have recommended approval of the deal and sent their findings to the five FTC members, the people said. Approval requires a simple majority. Hertz agreeing to sell the locations was reported earlier by the Wall Street Journal.
Hertz, which has sought to take over Dollar Thrifty for more than five years, agreed to sell its 62 Advantage brand locations in the U.S. to address the FTC's concern that going from four major companies to three would crimp competition in the rental-car market, the people said.
FTC and Hertz spokesmen declined to comment.
The four largest rental car companies - Enterprise, Hertz, Avis Budget Group Inc. and Dollar Thrifty - control 80 percent of the U.S. market, according to market researcher IBISWorld.
Shares of Dollar Thrifty rose 2.1 percent Monday to $85.80 at the close in New York, and Hertz jumped 2.5 percent to $14.70.
Shares of Dollar Thrifty have been rising in recent days as more investors become confident a deal will be made. The stock price, however, still remains below the offer price, which analysts say indicates some doubt in the market.
Dollar Thrifty employs 780 people in Tulsa. Hertz has a staff of 1,700 in Oklahoma City. Hertz officials have said they plan to conduct an efficiency study of both operations after the deal closes.
Original Print Headline: Hertz agrees to sell more locations
The Tulsa World Business staff contributed to this story by Bloomberg News.
Hertz customer Paul Ratcliff (left) rents a car from an employee who declined to give his name at Tulsa International Airport. MATT BARNARD / Tulsa World