Dollar Thrifty Calls for Appealing Bid

Dollar Thrifty Automotive Group has called on Hertz Global Holdings to put an end to two years of takeover bids by making an appealing offer to settle the matter. On Wednesday, the company said it hasn’t received a buyout offer from any party this year. It has attracted several bids from Hertz and Avis Budget Group over recent years, but antitrust concerns have hindered the process.

Dollar Thrifty is considered to be the last big prize in the US car hire industry, and a takeover of the group would leave only three firms to dominate over 90% of the nation’s car hire market. Enterprise Holdings – which owns and operates Enterprise Rent-A-Car, National Car Rental and Alamo Rent a Car – leads the US market. In a statement, Dollar Thrifty said that it’s time for an appealing bid to be made or for the process to end so they can move forward under a standalone plan, without further distraction of a speculated merger.

Avis Budget dropped out of the bidding process last year amid the buyout of its European unit for about $1 billion. However, Hertz has put its offer on hold, saying that it would wait for antitrust approval before issuing its final bid. The last offer that Hertz made valued Dollar Thrifty at about $1.94, and this was in October. In the meantime, the group’s market value has risen to around $2.12 billion.

Dollar Thrifty ended its sale process in October, but there has been speculation of a takeover since Hertz has continued to note its interest in the company. In fact, during a post-earnings call earlier in the week, Hertz chairman and chief executive Mark P. Frissora said that the company is still interested in buying Dollar Thrifty and is in talks with the Federal Trade Commission (FTC) about the matter. If the company is to make an offer now, it will have to be worth much more than the $1.2 billion bid it started with in April 2010.

Meanwhile, Dollar Thrifty says reports in the media about a possible asset sale by Hertz have caused uncertainty for the company’s business partners and staff. It also says that it’s expressed these concerns to senior FTC officials. During a conference call, chief executive Scott Thompson said that a few workers have left Dollar Thrifty due to the uncertainty surrounding the potential acquisition. They need to move forward at some point. This has definitely hindered what they would be doing from a return-cash-to-shareholder prospective, he added.

Since it ended the sale process in October, Dollar Thrifty has been aggressively implementing a plan to buy back shares. So far this year, it has bought back about $127 million worth. Under its current share repurchase programme, it has about $273 million worth of shares left to buy (as of the end of June). Thompson says they continue evaluating all options for maximising shareholder value – which includes the rationalisation of the capital structure via share repurchases or other alternatives.

In other Dollar Thrifty news, the group has reported a profit increase for the second quarter, as well as raised its earnings outlook for the year. Net income was up from $42.5 million to $49.4 million; while Corporate Adjusted EBITDA was up from $81.2 million to $88.3 million. Vehicle rental revenue was up slightly from $378.2 million to $378.9 million; while revenue per unit was down slightly from $1,080 to $1,077. Realized rental day growth was 4.2%, which was offset by a 3.8% fall in revenue per day.