Where the Avis, Dollar Thrifty Saga Goes from Here

In the latest non-development in the Dollar Thrifty takeover saga Avis has yet to enter into a merger agreement with Dollar Thrifty and has not commenced its promised exchange offer for Dollar Thrifty.

Ronald Barusch, who spent more than 30 years as an M&A practitioner at Skadden, Arps, Slate, Meagher & Flom LLP before retiring this year, offered some insights on where the saga might go from here in a column in the Wall Street Journal.

Barusch's first thought is that Hertz will have to wait for its $50 million breakup fee. Hertz only will be paid if Dollar Thrifty signs a merger agreement or recommends an offer. That probably won't happen before antitrust issues with the Avis bid are resolved. The agreement or recommendation must happen within 12 months, and these issues can take a long time to resolve. This now means a significant portion of Avis' antitrust risk has been shifted to Hertz, says Barusch.

Barusch contends that Avis dodged the reverse breakup fee bullet. Avis spent weeks resisting any fee payable for failing to clear antitrust hurdles. When it looked like that might ruin its deal, Avis offered a $20 million reverse breakup fee - compared to Hertz's $50 million fee - at the last minute, but only if Dollar Thrifty signed a merger agreement. Since there is no merger agreement, there will be no fee, at least until the parties have a lot more visibility on the antitrust issues.

In addition, Barusch notes, this deal is likely to go into "radio silence." An exchange offer requires almost every move to be disclosed. However, with no exchange offer, almost no disclosure is required until a material agreement is signed. Dollar Thrifty and Avis recognized that by saying they would not make further announcements except as required by law.

Barusch asks: Did Avis breach a contract by not commencing an exchange offer? He believes Avis will probably be sued over this issue. But what are the damages at this point? Here are the words in one of Avis' press releases: "If Dollar Thrifty stockholders do not approve the Hertz transaction .... Avis Budget will continue to actively pursue the acquisition of Dollar Thrifty, including commencing an exchange offer at our recent offer price no later than 10 business days after the meeting."

But a prior press release containing Avis' promise, could make it illusory: "We will keep such offer open until the end of the year while we continue to pursue antitrust clearance."


  1. kevin [ October 14, 2010 @ 06:29PM ]

    if Avis Budget Group aquires Dollar Thrifty it will for sure be a company most likely to be ruined due to the fact that Avis Budget Group uses only the Kory Sales Technique which has been proven not to be effective. Dollar stockholders be beware.

  2. somad [ October 16, 2010 @ 05:24AM ]

    Dollar thrifty is not not the same company it was 5 years ago...whats the difference

  3. bob angarola [ October 16, 2010 @ 08:24AM ]

    This is why we need Bill Lobeck and Jim Philion to once again be the heroes and save Thrifty from demise!!!!

  4. fact checker [ October 18, 2010 @ 06:00AM ]

    The breakup fee is FROM Hertz TO Dollar Thrifty not vice versa...this article has it backwards. I don't see the Avis Budget deal coming anytime soon...they haven't shown the ability to get regulatory approval which was a key positive in the now-dead Hertz deal.

  5. Paul [ October 18, 2010 @ 07:49AM ]

    Considering the performance of both Hertz and Avis,vs. the DTG's very credible performance and stock-price recovery. DTG shareholders would be way ahead of the game to continue on as they are. The only legitimate reason for DTG to become acquired is to generate huge individual profits for Scott Thompson & friends!

  6. Phil Baker [ October 18, 2010 @ 08:16AM ]

    The only benefit to either the Hertz or Avis deal is to generate huge profits for Scott Thompson & friends! DTG is a much better managed company than either Hertz or Avis, not only from the financial angle but from a customer-satisfaction view as well

  7. bob angarola [ October 18, 2010 @ 01:53PM ]

    Right on Paul. Maybe the employees should get some backing, buy the board out and take the company private. Simplistic I know, but in times past, when the company had great leadership under Lobeck and Philion it thrived! Has anyone seen even the slightest

    hint of a marketing campaign? Oh that's right, ALL INTERNET.

  8. Bueno [ October 19, 2010 @ 02:23PM ]

    The merger agreement was the best marketing campaign they had in a while. (Almost) free publicity.

  9. Whyme [ December 30, 2010 @ 11:31AM ]

    DTG stockholders made a huge mistake. Notice their share devaluing? If Avis pays more than the current value I would be shocked. I doubt that Hertz would come back to the table with their previous offer. I DTG continues as they are, the business is so competitive that their stock will no doubt continue to spiral down. I doubt tha Hertz is going to roll over and play dead. I think everyone should get out now.

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