UPDATE 2-Avis tops Hertz with $1.33 bln bid for Dollar Thrifty

* Avis offers $46.50 a share for Dollar Thrifty

* Total deal value of $1.33 billion

* Offer still below Dollar's last closing price (Recasts, adds new details throughout)

By Michael Erman and A.Ananthalakshmi

NEW YORK/BANGALORE, July 28 (Reuters) - Car rental company Avis Budget Group Inc CAR.N offered about $1.33 billion for Dollar Thrifty Automotive Group Inc (DTG.N), topping Hertz Global Holdings' (HTZ.N) offer as the two rivals spar to pick up the budget brand.

Still, Avis' $46.50-a-share bid fell about $2 short of Dollar Thrifty's closing stock price on Wednesday. Thrifty's shares fell in after-the-bell trading.

Avis said its bid provides a premium of about 17 percent to the value of the Hertz offer. The Hertz offer is currently worth $39.86 a share.

"We are prepared to enter into a merger agreement that contains substantially the same terms as the Hertz merger agreement, but which includes removing the matching rights, eliminating the break-up fees, and increasing the commitment to secure antitrust approvals," Avis said in a letter to Dollar Thrifty management.

Under the terms of its bid, Avis said Dollar Thrifty shareholders would receive $39.25 in cash and 0.6543 in stock for each share of Dollar. The cash portion of Avis' bid includes a $6.88 special dividend that Dollar Thrifty would pay to its shareholders, as does the Hertz bid.

In the current cost conscious environment, budget brands like Dollar Thrifty -- one of the few major car rental brands to post a profit in 2009 -- are increasingly important.

Hertz agreed to buy Dollar Thrifty in April, but Avis said soon after that it planned to make a better offer. Avis also criticized some of the terms of the Hertz deal, including Hertz's right to match competing bids.

Hertz and Avis have already begun the process of getting antitrust approval and have both received "second requests" from the regulator.

Dollar Thrifty shares closed at $48.68 on the New York Stock Exchange on Wednesday, but fell to $48 in after market trade. They have risen 25 percent since Hertz's offer in April. (Editing by Savio D'Souza and Carol Bishopric)