Business 2012 Look Back: Dollar Thrifty, Hertz finally get deal done
BY D.R. STEWART World Staff Writer
Sunday, December 30, 2012
12/30/12 at 4:52 AM
Learn more about Dollar Thrifty: Additional stories provide details on the Hertz deal.
As 2011 ended, it appeared a two-year chase for Dollar Thrifty Automotive Group Inc. by Hertz Global Holdings Inc. and Avis Budget Group Inc. was over.
In September 2011, Avis Budget said it was ending efforts to acquire Tulsa-based Dollar Thrifty because of market conditions and its $1 billion agreement to acquire Avis Europe plc.
In October, Hertz withdrew its $2.25 billion, $72-per-share hostile bid for Dollar Thrifty, citing unfavorable market conditions.
Many industry analysts believed Dollar Thrifty had weathered the hostile takeover storm.
Not Dollar Thrifty CEO Scott Thompson, however, who said Hertz would be back in 2012.
In February, Dollar Thrifty reported 2011 fourth-quarter net income of $33.9 million, or $1.08 per share, compared with 2010 fourth-quarter net income of $12.49 million, or 41 cents per share. Thompson said the board of directors extended for another year the company's "poison pill" shareholder rights plan.
A week later, Hertz CEO Mark Frissora said that once Hertz received Federal Trade Commission approval of a Dollar Thrifty acquisition, they would approach the Dollar Thrifty board to discuss purchase terms.
"Well, here we go again," Thompson said in a memo to employees. "Hertz is going to try, again....I fully expect Hertz will get FTC approval at some point...The issue that will decide if there will ever be a transaction is PRICE. If Hertz is willing to pay a price that is in our shareholders' best interest then something will eventually happen. If not - it will just be more noise."
Hertz's Frissora believed Dollar Thrifty's leisure value niche is a perfect complement to Hertz's premium corporate and leisure market strengths, Thompson said, so the Park Ridge, N.J., firm would make another offer for the Tulsa company.
But Thompson said he was determined to manage Dollar Thrifty as a stand-alone entity.
The market reacted favorably.
On March 15 and 16, Dollar Thrifty shares closed above $80.
Throughout the spring, hedge fund managers bought Dollar Thrifty shares.
Michael Millman, who follows the rental car industry for Millman Research Associates, said in a May note that Hertz could pay $100 a share for Dollar Thrifty and still boost Hertz's earnings.
In negotiations with the FTC, Hertz executives said they would seek to avoid the agency's antitrust concerns by selling its Advantage rental car value brand.
Dollar Thrifty's board approved a merger deal with Hertz in August, under which the New Jersey firm would acquire Dollar Thrifty for $2.3 billion, or $87.50 per share.
In addition to divesting Advantage, Hertz was required by the FTC to sell 29 on-airport rental car locations.
Hertz completed the acquisition of Dollar Thrifty on Nov. 19, and the New York Stock Exchange suspended trading of Dollar Thrifty shares just before noon of the same day.
A day later, Frissora flew to Tulsa to speak with Dollar Thrifty employees at the company's corporate offices at 5310 E. 31st St.
Frissora told Dollar Thrifty workers, 780 of whom are employed in Tulsa, that Hertz would not abandon its Tulsa operations and that decisions about staffing and facilities would be made in the next 90 to 180 days.
Dollar Thrifty Automotive Group at a glance
Dollar Thrifty Automotive
Group Inc., the nation’s fourth-largest
rental car company.
Based in Tulsa, where it employs
780 people, was formed in
1990 by Chrysler Corp. and spun
off as an independent company
in 1997. Dollar Rent A Car and
Thrifty Car Rental employ 6,000
people, and the company has
1,300 franchises in 82 countries.
Original Print Headline: DTAG deal gets done
D.R. Stewart 918-581-8451
Wes Gibson loads baggage into his Dollar Thrifty rental car at Tulsa International Airport in August. MATT BARNARD / Tulsa World file