Dollar Thrifty Finally Gets an Offer from Avis


Dollar Thrifty Automotive Group (DTG) on Thursday confirmed that it received a bid from Avis Budget Group (CAR) to acquire all of Dollar Thrifty common stock for $39.25 in cash and 0.6543 share of Avis Budget stock per Dollar Thrifty share. This comes to $46.50 a share, or approximately $1.33 billion.

While the Avis bid is higher than the April bid by Hertz Global Holdings (HTZ), which is currently worth $39.86 a share, it's below Dollar Thrifty's closing price Wednesday of $48.68.

The car-rental company already executed a definitive merger agreement on April 25 with Hertz, which even filed a preliminary proxy statement/prospectus with respect to the merger with the Securities and Exchange Commission on May 25. Dollar Thrifty has scheduled a special meeting of shareholders on Sept. 16 for a vote on this matter. Shareholders of record as of Aug. 13 would be entitled to receive notice of and to vote at that meeting.

Now, the company's board of directors will review and consider the terms of the Avis Budget proposal in accordance with its fiduciary obligations to shareholders and consistent with its commitments under the Hertz merger agreement.

While Dollar Thrifty made no further comment, the letter from Avis says it's "prepared to enter into a merger agreement that contains substantially the same terms as the Hertz merger agreement, but which includes removing the matching rights, eliminating the break-up fees, and increasing the commitment to secure antitrust approvals."

So far, the market seemed unconcerned with the Hertz offer, as Dollar's share traded well above the bid price in anticipation of an Avis offer, especially following its letter from early May. Taking Dollar's stock price action in after-hours trading, it seems investors still think there's room for a slightly higher bid because the shares are down to around $48 -- above the offer price.