Hertz to buy rival for US$1.2 billion
Hertz Global Holdings Inc said Monday it has agreed to buy rival Dollar Thrifty Automotive Group for about US$1.17 billion in cash and stock as it tries to expand its vacationer business.
Shares of both companies soared.
The deal will give Hertz, already the world's largest car rental company, a third more locations around the globe, boosting its total to 9,800. More importantly, it will also give the company's leisure segment a much needed boost.
"Together we will be able to compete even more effectively and efficiently against other multi-brand car rental companies, offering customers a full range of rental options in the US," Hertz CEO Mark Frissora said in a statement.
Hertz's business is roughly split between vacation and business travellers, while Dollar Thifty's customers are mostly vacationers hunting for cheap rentals.
Hertz said its bid values Dollar Thrifty, based in Tulsa, Oklahoma, at US$41 per share, a 5.5 per cent premium to Friday's closing price of US$38.85. The offer is made up of 80 per cent cash and 20 per cent Hertz stock.
Dollar Thrifty shares hit a three-year high of US$42.60 in morning trading Monday. Meanwhile, Hertz shares rose to a two-year high of US$15.60.
Under the terms of the deal, Dollar Thrifty will become a wholly owned unit of Hertz.