Avis’ $1.33 billion offer tops Hertz bid for rival

Avis Budget Group Inc.’s $1.33 billion offer for Dollar Thrifty Automotive Group Inc., which topped Hertz Global Holdings Inc.’s agreement to buy the rental-car company, is a sign of a potential bidding war, analysts said.

The $46.50-a-share offer includes $39.25 in cash and 0.6543 of an Avis share for each Dollar Thrifty share, Parsippany, N.J.-based Avis said Wednesday in a statement. The offer is 4.5 percent less than Dollar Thrifty’s Wednesday closing price.

Avis Chief Executive Officer Ronald Nelson is following through on a May 3 letter in which he said he was interested in making a “substantially higher” bid for Dollar Thrifty than Hertz’s $1.2 billion offer.The proposal may draw higher bids from both Hertz and Avis, said Fred Lowrance, an analyst with Avondale Partners LLC.

“Through an economic recovery and shrewd management decisions, Dollar Thrifty has turned itself into a very valuable asset,” Lowrance said Wednesday. “Both of these companies know that, and they’re both willing to pay more.”

Avis, in its offer letter, saidDollar Thrifty should require Hertz to eliminate two provisions in its bid - a $44.6 million breakup fee and the right to match competing offers - in return for permission to continue making offers for the company.

Hertz on April 26 offered $41 a share in cash and stock for Dollar Thrifty to add to its namesake and Advantage brands and extend its lead over Avis as the economic recovery spurred travel. Dollar Thrifty said that it received the Avis bid and will consider it.

Dollar Thrifty rose $1, or 2 percent, to close at $49.68. Avis gained 80 cents, or 7.2 percent, to close at $11.88. Hertz climbed 23 cents, or 2.1 percent, to $11.23.

“We continue to believe that a combination with Avis Budget presents a compelling opportunity for our respective stakeholders and the prospect for your shareholders to obtain the highest value for their investment,” Nelson said in a letter to Dollar Thrifty’s management that was included in the statement.

Tulsa-based Dollar Thrifty has scheduled a Sept. 16 special meeting of its stockholders to vote on Hertz’s bid.

Business, Pages 22 on 07/30/2010

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