Avis Budget Group Inc. announced Wednesday an offer of $46.50 per share for Dollar Thrifty Group. The bid includes $39.25 in cash and 0.6543 shares of Avis stock, and will be financed with available cash and committed financing.
The bid of more than $1.3 billion tops the bid by Hertz Global Holdings; however, the offer was below Dollar Thrifty's closing price of $48.68 a share on Wednesday.
In a July 28 letter to Dollar Thrifty, Avis Budget Group Chairman and CEO Ron Nelson stated, "We are prepared to enter into a merger agreement that contains substantially the same terms as the Hertz merger agreement, but which includes removing the matching rights, eliminating the break-up fees, and increasing the commitment to secure antitrust approvals. ... In short, we believe that the higher purchase price we are offering, combined with the terms of our proposed merger agreement, makes our offer a superior one from the perspective of Dollar Thrifty and its shareholders."
In a press statement, Dollar Thrifty confirmed receipt of the letter "outlining an unsolicited proposal to acquire all Dollar Thrifty common stock ..."
The Dollar Thrifty statement continues:
"As previously announced, Hertz Global Holdings Inc. ("Hertz") and Dollar Thrifty executed a definitive merger agreement on April 25, 2010 and the Company continues to be bound by the terms of that agreement. ... The Dollar Thrifty board of directors will review and consider the terms of the Avis Budget proposal in accordance with its fiduciary obligations to shareholders and consistent with the Company's commitments under the Hertz merger agreement."
Dollar Thrifty has scheduled a special meeting of its stockholders to vote on Hertz's bid for Sept. 16.
"We believe that CAR's [Avis Budget Group Inc.] bid is a positive, in that it marks the beginning of the end of the period of uncertainty for HTZ [Hertz Global Holdings Inc.] and CAR," wrote travel industry analyst Chris Agnew of MMK Partners in a statement. "In addition, CAR's offer suggests to us that the bidding process will be disciplined, and therefore we continue to believe the eventual acquisition will be accretive. We believe that CAR's bid will not be the company's final offer." Agnew stated that MMK Partners continue to be buyers of CAR and HTZ.