Hertz Global Holdings Inc. today made a new offer to buy Dollar Thrifty Automotive Group for an equity value of $2.2 billion, according to Hertz. The offer is for $72 total per share based Hertz's May 6 stock price. Hertz said it will divest discount brand Advantage to gain FTC clearance.
A previous offer by Hertz for Dollar Thrifty was rejected by Dollar Thrifty shareholders in September. That deal was valued at about $51 a share. Hertz said its latest offer is a 26 percent premium to Dollar Thrifty's 90-day average share price.
The offer is 24 percent greater than Avis Budget Group's present offer. In regards to the higher offer price, Hertz stated that valuation multiples for both Hertz and Avis have increased by about 20 percent since the end of September 2010. Hertz also cited the improved outlook of the industry overall, driven in part by improved residual values. As a result, Dollar Thrifty's expected corporate earnings have "increased meaningfully since last fall," according to Hertz.
As the next steps towards a deal, Hertz said it will complete the divestiture of Advantage and work toward FTC approval. Hertz said it will enter into discussions with Dollar Thrifty to reach a consensual deal and look to secure support of Dollar Thrifty shareholders.
The FTC has not yet issued a ruling regarding the Avis and Dollar Thrifty merger, though both companies said they had expected clarity on the merger by the first week in April.
Dollar Thrifty shares stood at $78.82 as of 12:22 pm EST.
