Hertz Global Holdings Inc. and Dollar Thrifty Automotive Group Inc. today announced that they have entered into a definitive merger agreement under which Hertz would acquire Dollar Thrifty for $87.50 per share in cash, in a transaction valued at a corporate enterprise value of approximately $2.3 billion.

The boards of directors of both companies have unanimously approved the transaction, the companies said in a joint statement. The transaction is expected to close in mid to late October.

Hertz also announced today that it has reached an agreement to sell the Advantage business to Franchise Services of North America ("FSNA") and Macquarie Capital. The closing of that divestiture is conditioned upon, among other things, Hertz completing an acquisition of Dollar Thrifty.

The successful completion of the transaction is also subject to regulatory clearance by the Federal Trade Commission. According to the statement, Hertz has remained closely engaged with the FTC to secure antitrust clearance for the proposed transaction and Dollar Thrifty will fully cooperate in the process.

Hertz believes it will receive FTC clearance in mid-October. Hertz also said it would divest “certain additional assets and DTG airport concessions” to win regulatory approval.

Mark P. Frissora, Hertz chairman and CEO, said: "We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy — but worthwhile — pursuit. We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies. The transaction provides Hertz instant scale with two new, well-established brands with airport concession infrastructure in the mid-tier value segment. We'll be a stronger global competitive player with a full range of rental options not only in the U.S. but in Europe and other markets given Dollar Thrifty's strong international presence. In addition, we look forward to moving efficiently and swiftly through the regulatory process having reached an agreement to divest our Advantage brand."

On a conference call to announce the deal, Frissora said he expects the deal to be “EBITDA positive” in its second year.

On the call, Frissora also said Hertz will position Thrifty as a “Spartan brand” and will expand Thrifty in Europe, where Advantage locations will be converted to Thrifty.

"Hertz has made a compelling offer to our stockholders that reflects the strength of our business and our team,” said Scott Thompson, president, CEO and chairman of the board of Dollar Thrifty. “Hertz is the logical partner for us with the resources to expand our value focused leisure brands in key car rental markets around the world. After three years of merger-related activity and speculation, I am pleased that we have reached a win-win transaction for both Hertz and Dollar Thrifty."

The combined company would have a combined LTM (last 12 months) sales on June 30, 2012 of $10.2 billion and EBITDA of approximately $1.8 billion across approximately 10,000 locations globally.

The company anticipates at least $160 million of annual cost synergies from the transaction, the statement said.

For past coverage and Dollar Thrifty merger-related news, click here.