Hertz-Dollar Thrifty merger nod by FTC called likely
BY Staff and Wire Reports
Thursday, November 15, 2012
11/15/12 at 2:44 AM
Additional stories provide details on the Hertz deal.
The Federal Trade Commission is prepared to approve Hertz Global Holdings Inc.'s $2.3 billion acquisition of Dollar Thrifty Automotive Group Inc. after Hertz agreed to shed more airport locations than it initially offered, four people familiar with the deal said Wednesday.
To win antitrust clearance, Hertz said it would divest about 15 additional airport outlets including at Detroit and Cleveland, Ohio, said the people, who asked not to be identified because the talks aren't public. The agency's commissioners were expected to vote on the deal this week, according to an earlier report by a business publication.
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.
Once completed, the combination with Tulsa-based Dollar Thrifty 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 Hertz CEO Mark Frissora, may be the last combination of major U.S. car rental companies that can win regulatory approval.
Together, Hertz, Enterprise Rent-A-Car and Avis Budget Group Inc. 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, Calif.-based industry researcher.
Hertz, with 8,750 outlets worldwide, has more than 3,900 U.S. locations, and Dollar Thrifty has about 280 corporate-owned outlets in the U.S. and Canada.
Dollar Thrifty has 780 employees in Tulsa; Hertz's biggest operation is its 1,700-person center in Oklahoma City. Hertz said it will evaluate staffing and functions at both locations after the merger.
The $87.50-a-share offer represents an 8 percent premium to Dollar Thrifty's closing price of $81 on Aug. 24. The price is more than twice the $41-a-share Hertz offered in April 2010.
Dollar Thrifty rose 2.1 percent to $86.99 in New York; Hertz fell 1.8 percent to $14.45. Earlier, Hertz jumped almost 5 percent and Dollar Thrifty rose 3 percent on news of the FTC's backing for the deal.
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, N.J.-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.'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 Dollar Thrifty.
Franchise Services, which operates the U-Save brand, is run by Co-CEO Sanford Miller, the CEO of Budget Group Inc. from 1997 to 2004.
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.
Original Print Headline: FTC ready to OK Hertz deal
The Tulsa World Business staff contributed to this story by Bloomberg News