Avis Budget Group Inc. today issued the following statement regarding its outstanding offer to acquire Dollar Thrifty Automotive Group Inc.:
We continue to believe in the merits of an Avis Budget-Dollar Thrifty transaction, and we are therefore increasing the cash portion of our offer from $40.75 to $45.79 per share (which would include the proceeds of a pre-closing special dividend to be paid by Dollar Thrifty consistent with our previous proposal). Our revised offer of $45.79 in cash and 0.6543 shares of Avis Budget stock represents a meaningful premium over the revised offer from Hertz Global Holdings Inc. We believe that the increased value is warranted based on improving fundamentals in the industry and at Dollar Thrifty in particular. We would be willing to offer an even higher price in the absence of the break-up fee that Dollar Thrifty's Board has provided for in its agreement with Hertz.
We believe it would be beneficial for Dollar Thrifty shareholders if the Dollar Thrifty Board of Directors engaged in a process to maximize value, rather than letting Hertz dictate timing and process.
Dollar Thrifty's Board continues to disappoint. Not only have they once again failed to engage in any discussions with Avis Budget prior to entering into the new binding agreement with Hertz, but they have also failed to use the renegotiation with Hertz as an opportunity to create a level playing field for all potential bidders. Dollar Thrifty's failure to remove Hertz's matching rights makes no sense given that Hertz characterized its revised offer as "non-negotiable and final."
Based on the analyses typically performed by regulatory authorities, a number of airports will become highly concentrated if Hertz acquires Dollar Thrifty (as traditionally defined by FTC analysis). A sale by Hertz of its Advantage brand - a trivial operation that has no presence at several dozen airports - is by itself unlikely to be a meaningful or sufficient remedy for any antitrust issues. Moreover, the real pricing picture, as shown in the materials posted today to the Investor Relations section of the Avis Budget Group website, tells the true story about Hertz's exclusive relationship with AAA: With more than $500 million of leisure revenue, Hertz's offering to AAA members clearly competes directly with Dollar, Thrifty and other value brands.
In light of these concerns, there is no justification for Dollar Thrifty holding a shareholder meeting before the FTC completes its review of the Avis Budget and Hertz submissions.
Citigroup and Morgan Stanley & Co. Incorporated are acting as financial advisors to Avis Budget Group, and Kirkland & Ellis LLP and Arnold & Porter LLP are acting as legal counsel.