Hertz to buy car hire rival Dollar Thrifty for $2.56 billion
By Megha Mandavia and Soyoung Kim
(Reuters) - Hertz Global Holdings (HTZ.N: Quote) agreed to buy rival Dollar Thrifty Automotive Group DTG.N for about $2.56 billion in a deal that puts the combined company's share of the U.S. car rental market at around 25 percent.
The merger ends more than two years of on-off takeover talks for Dollar Thrifty involving Hertz, the second-largest U.S. car rental company, and third-ranked Avis Group Inc (CAR.O: Quote).
With the long coveted acquisition of fourth-ranked Dollar Thrifty, Hertz would further cement its lead over Avis while narrowing the gap with market leader Enterprise Holdings, which owns Enterprise along with the Alamo and National brands.
Around 95 percent of the U.S. car rental market will be controlled by these three companies, following the deal.
Hertz shares jumped 11 percent to $14.65 on the New York Stock Exchange while Dollar Thrifty shares traded up 7 percent at $87.04, just below the offer price of $87.50.
In a sign that investors welcomed consolidation of the industry, Avis shares also rose 4 percent to $16.63.
The Hertz offer was at a premium of 8 percent to Dollar Thrifty's Friday closing price of $81 on the New York Stock Exchange and almost double a $1.2 billion offer Hertz made in April 2010.
Based on Dollar Thrifty's net cash position of $285 million, the deal has an enterprise value of $2.3 billion, the companies said. Continued...