Dollar Thrifty Shareholders Reject Hertz Bid, Boost Avis's Chances

Dollar Thrifty Automotive Group Inc. (DTG) shareholders voted against a proposed acquisition from larger car-rental competitor Hertz Global Holdings Inc. (HTZ), likely ending Hertz's five-month-long effort to acquire the company and indicating that a competing bid from Avis Budget Group (CAR) may gain traction. Hertz shares jumped in after-hours trading.

Dollar Thrifty shareholders rejected the Hertz acqusition by about a 54-46 margin, the company said in a statement today. Dollar Thrifty CEO Scott Thompson said the company "will evaluate all of our options going forward."

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Hertz first offered to buy Dollar Thrifty in late April for $41 a share, or about $1.17 billion, in an effort to get more market share in the leisure car-rental market. Avis Budget made its first bid for Dollar Thrifty in late July, offering $39.25 in cash and 0.6543 share of Avis Budget stock per Dollar Thrifty share, or about $1.33 billion for the company.

Avis Budget last week raised the cash portion of its bid to $45.79 a share, or 12% more than its bid earlier this month. Factoring in Avis's stock offering, its bid was worth about $52.79 a share, compared with Hertz's most recent $50 a share offer. Avis Budget has also been critical of the Hertz offer, saying earlier this month that the Hertz bid was "clearly inferior" and may have trouble clearing regulatory hurdles.

Hertz said yesterday that it would pull its offer off the table if shareholders voted against the proposed acquisition today.

"We arrived at our best and final $50 offer through an open, thoughtful and competitive negotiation and we cannot be held hostage in an open-ended process," Hertz CEO Mark Frissora said in a statement yesterday.

Following the Hertz statement, Avis Budget yesterday offered to pay Dollar Thrifty shareholders a $20 million reverse-termination fee, and that it would continue to pursue an acqusition of Dollar Thrifty shareholders rejected Hertz's proposed transaction.

Hertz shares rose 9.6% to $11.61 at about 5:10 p.m. Eastern Time in extended trading. Dollar Thrifty shares were little-changed at $50, while Avis Budget shares fell 1.1% to $11.52.