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Dollar Thrifty Investor Sells Shares, but Stock Could Still Have Appeal

The car rental company’s stock price will depend on the health of the overall economy.

by Staff
October 20, 2010
2 min to read


Although SAC Capital Advisors LP has reduced its holdings in Dollar Thrifty Automotive Group from 8.8 percent of the company's stock to 3.5 percent, that doesn't necessarily mean the stock has lost its appeal, according to Tulsa World.

Dollar Thrifty's shareholders on Sept. 30 voted down an acquisition offer from Hertz Global Holdings of $50.99 a share. Avis Budget Group had countered with a deal worth $53.33 a share.

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Dollar Thrifty now is cooperating with Avis to find out whether that company could get Federal Trade Commission approval for a combination. But the two companies do not have any signed acquisition agreement.

The antitrust clearance process might take six to nine months, said one asset manager.

Another investment manager pointed out that some of Dollar Thrifty's shareholders probably got their shares cheap.

In March 2009, the stock dropped to 62 cents as Dollar Thrifty struggled to stay out of bankruptcy. Even as late as last November, its shares still were trading below $20.

After Avis began its antitrust process, Dollar Thrifty CEO Scott Thompson suggested it might take more than $53 a share to tilt shareholders toward approving a deal.

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But one money manager said if Avis gets FTC approval, it may not end up paying a significantly higher price to get Dollar Thrifty. Analysts have speculated that another potential buyer, such as an investment fund or European car rental company, could decide to pursue Dollar Thrifty. But the money manager said that if no new bid emerges, Avis could come back with a "take it or leave it" deal priced at $54 to $57.

The antitrust clearance period means a formal offer from Avis might not emerge until next summer, another asset manager said.

Or, Dollar Thrifty could decide to remain an independent company.

Investors who are thinking about buying Dollar Thrifty now should decide how optimistic they are about the economy, Russell said, since the car rental business is dependent on people having money to spend.

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