Hertz Reveals Latest Offer for DTAG
Management at Dollar Thrifty Automotive Group was tight-lipped Monday regarding the latest offer from Hertz Global Holdings to purchase the company.
Hertz laid out an offer Monday morning for the country’s fourth-largest rental company that would pay Dollar Thrifty shareholders $72 per share. Comprising that $72 per share amount would be $57.60 in cash and 0.8546 shares of Hertz.
Not long after Hertz announced the offer, Dollar Thrifty revealed that its board of directors would review the offering, but the company made no definitive commitment.
“Dollar Thrifty’s board of directors will review and consider Hertz’s offer and related statements in accordance with its fiduciary duties to shareholders, and will have no further comment on this matter at this time,” DTAG said in a statement.
“Dollar Thrifty shareholders are advised to take no action pending the board’s review,” it added.
Hertz contends that the offering is a 26-percent premium over DTAG’s 90-day share price and is an 18-percent over the 60-day value.
“The Hertz proposal offers immediate and superior value as well as deal certainty to Dollar Thrifty shareholders. Moreover, it is a firm offer in contrast to the entirely hypothetical Avis Budget transaction,” Hertz officials noted.
There would be no financing condition or contingency to meet for the offering to go through, the company stressed.
Hertz also claims its offers marks a 24-percent premium to the offer Avis Budget Group made more than seven months ago, calling the price on the Avis Budget offer “entirely hypothetical.”
Hertz and Avis, of course, have been engaged in a heated battle to acquire Dollar Thrifty for quite some time.
In its first-quarter earnings report released last week, Avis said the following regarding the potential DTAG acquisition: “The company continues to pursue the acquisition of Dollar Thrifty Automotive Group, Inc., the fourth-largest car rental company in the United States. Avis Budget Group and Dollar Thrifty have been working together to obtain antitrust clearance for the proposed acquisition.”
Likewise, DTAG had this to say in its earnings report, also released last week: “As previously reported, the company submitted its certification of substantial compliance with the Federal Trade Commission’s second request in late February. The company is currently continuing to cooperate with Avis Budget with respect to FTC issues. The company and Avis Budget currently have no agreement, written or verbal, regarding merger terms, including price.”
With regards to Monday’s announcements, a company spokesperson with Avis declined to comment.
Meanwhile, Hertz in its statement that it is taking steps to “expeditiously close this transaction.” Specifically, the company is communicating with the Federal Trade Commission and is gearing up to divest its Advantage brand.
Hertz maintains confidence that the FTC will green light a purchase of DTAG by Hertz.
“We believe that the acquisition of Dollar Thrifty by Hertz would be in the best interests of both companies’ shareholders and of rental car consumers, and that it will accelerate Hertz’s growth opportunities by leveraging the combined brand portfolio and unparalleled value and service reputations of both companies,” said Hertz chairman and chief executive officer Mark Frissora.
“To this end, we have today made a superior bid. We are seeking a consensual business combination with Dollar Thrifty, and are proceeding on an accelerated timetable in order to provide immediate and certain value to Dollar Thrifty shareholders,” he continued.
Frissora added: “We have always known that antitrust considerations would be pivotal in any transaction with Dollar Thrifty, and that a combination of Avis Budget and Dollar Thrifty would face serious antitrust obstacles.
“Avis Budget has been unable to produce a viable antitrust remedy, despite an entire year of discussions with the FTC with no end in sight,” he shared. “In contrast, we are confident we can deliver a compelling proposal to the FTC centered around the divestiture of our Advantage brand, and are committed to working proactively to move through this process as quickly as possible.”
Hertz also provided text of the letter it sent to DTAG president and chief executive officer Scott Thompson, as follows:
May 9, 2011
Dollar Thrifty Automotive Group, Inc.
5330 East 31st Street
Tulsa, Oklahoma 74135
Attention: Scott L. Thompson, President and Chief Executive Officer
Dear Scott:
As we discussed yesterday, Hertz is moving forward with an exchange offer for all outstanding shares of Dollar Thrifty Automotive Group, Inc. Hertz is offering Dollar Thrifty shareholders $72.00 per share (based on Hertz’s closing stock price on May 6, 2011), consisting of $57.60 in cash and 0.8546 shares of Hertz.
We believe that Hertz’s offer represents a compelling opportunity for your shareholders to realize superior value in the near term with a very high degree of closing certainty.
Hertz is looking forward to proceeding on a consensual basis with the support of the Dollar Thrifty Board of Directors and management team. Our exchange offer is intended to provide Dollar Thrifty’s shareholders with a firm offer on an accelerated timetable in order to position Hertz and Dollar Thrifty to close a deal and deliver value to Dollar Thrifty’s shareholders as soon as possible.
We believe we have made a superior offer that reflects Dollar Thrifty’s improved recent performance and outlook for 2011. Specifically, our offer provides:
• a 26-percent premium and 18-percent premium to Dollar Thrifty’s 90-day and 60-day average share price, respectively;
• a 7.6x multiple of Dollar Thrifty’s LTM EBITDA for the period ended March 31, 2011; and
• a 24-percent premium to the value of the entirely hypothetical price announced by Avis Budget Group, Inc. over seven months ago of $45.79 in cash and 0.6543 shares of Avis stock, based on the closing stock prices for Hertz and Avis on May 6, 2011. These are substantial premiums, especially after taking into account the significant takeover speculation premium already included in Dollar Thrifty’s current stock price.
Our offer delivers a high degree of closing certainty. We are engaged in discussions with the Federal Trade Commission and have started a process for the divestiture of our Advantage brand. We are highly confident that we will obtain FTC clearance for the transaction and are committed to a fast path forward. In contrast, Dollar Thrifty’s shareholders do not have any offer from Avis, and it has become clear that Avis is either unwilling or unable to close on an offer even if it made one because of serious antitrust obstacles.
Our offer is not subject to any financing condition or contingency.
This transaction is the highest priority for Hertz and has the unanimous support of our Board of Directors and management team. I am available to speak with you at any time, and I encourage you to have your financial and legal advisors meet with Mark McMaster at Lazard and Scott Barshay at Cravath, two of our principal advisors. We look forward to working with you and your team to advance the best interests of our respective shareholders, employees and customers.
Sincerely,
Mark P. Frissora
Chairman of the Board and Chief Executive Officer
Hertz Global Holdings, Inc.