Avis to rival Hertz bid
Avis Budget Group Inc said rival rental car company, Dollar Thrifty Automotive Group Inc is selling itself too cheaply to Hertz Global Holdings Inc., and promised Monday to top last week's buyout offer.
In a letter to two top executives at Dollar Thrifty, Avis' chairman and CEO said it wants Dollar Thrifty to open its books before it formally counters the US$1.17 billion offer from Hertz.
"We would like to make a substantially higher offer to acquire Dollar Thrifty, especially in light of your recent performance and the potential synergies associated with an acquisition of Dollar Thrifty by Avis Budget," CEO and Chairman Ronald Nelson wrote in the letter.
Nelson said executives at his company have been interested in a possible acquisition of the Tulsa, Oklahoma, company for "several months," going as far as to try to set up meetings with leaders to talk about a sale. Instead, Nelson said Avis was blindsided by the announcement of a tie-up with Hertz.
"It is hard to understand how your failure to engage in discussions with an interested strategic buyer, who you know also would be able to achieve significant synergies as a result of a combination, can be consistent with the fiduciary duties that you and your board carry to seek the best possible deal for your shareholders," he wrote.
A spokeswoman at Dollar Thrifty did not immediately return a message seeking comment.
Hertz, based in Park Ridge, New Jersey, is already the world's largest car rental company by locations.
Its offer valued Dollar Thrifty at US$41 per share. That bid is made up of 80 per cent cash and 20 per cent Hertz stock.
Whoever succeeds in wooing Dollar Thrifty will find itself with an expanded stake in the already consolidated rental car market.
Hertz also owns the Advantage rental car company. It competes against Enterprise Holdings Inc, which has 7,600 Enterprise, Alamo and National sites and raked in US$12.9 billion in revenue last year; and the smaller Avis Budget Group, which has 6,900 Avis and Budget locations and about US$5.13 billion in revenue.
Shares of Parsippany, New Jersey-based Avis Budget rose 22 cents to US$15.34 in morning trading Monday. But Dollar Thrifty shares soared $6.12, or 13.9 per cent, to US$50.11.
Hertz shares fell 61 cents, or 4.2 per cent, to US$13.85.