Dollar Thrifty gets $1.33 billion Takeover Bid

Dollar Thrifty Automotive Group was plunged further into a takeover war between Avis Budget Group and Hertz Global Holdings on Wednesday when Avis Budget made a US$1.33 billion bid to buy the company. This has achieved the bidder’s goal of beating out the US$1.2 billion cash and stock offer made by Hertz earlier this year.

The offer from Avis Budget values Dollar Thrifty at about US$46.50 per share. This is less than the closing price for the company, which was US$48.68. However, it’s still almost 20% more than the shares of the company during April trading. The bid from Hertz, on the other hand, only values the company at about US$41 per share.

Dollar Thrifty says that are going to review the bid from Avis Budget; however, they have already entered into a definitive deal with Hertz. The company’s shareholders are due to vote on the deal September 16, and if they back out, they will be required to pay a termination fee of US$44.6 million, plus expenses.

Hertz has a better incentive to combine its operations with Dollar Thrifty, as it will enable them to reach a new customer market. Although Hertz is the biggest of the 3 firms, they focus mostly on the business travel market, so the deal would open the leisure travel market for them more. On the other hand, Avis Budget already has combined operations with Budget, which caters to leisure customers.

Dollar Thrifty shares fell due to the bid announcement, declining by US$0.08. However, shares in Avis rose US$0.19, while Hertz shares have also increased US$0.11.