Dollar Thrifty shareholders reject Hertz takeover

CHICAGO/NEW YORK (Reuters) - Dollar Thrifty Automotive Group's (DTG.N) shareholders rejected a $1.4 billion takeover bid by Hertz Global Holdings Inc (HTZ.N) on Thursday, bringing an end to Hertz's pursuit of the low-cost car rental company.

After the vote, Hertz said it would follow through with plans to walk away from the deal, leaving an opening for competitor Avis Budget. CAR.N

Avis has been working for months to wrest Dollar Thrifty from Hertz and has put a higher bid on the table. But Dollar Thrifty's board remained loyal to Hertz despite the higher bid, citing worries about the ability of Avis to obtain antitrust approval.

Avis offered on Wednesday to add a $20 million reverse break-up fee to its bid if Hertz ended its run for Dollar Thrifty, addressing what had been a major sticking point for Dollar Thrifty. A target company receives a reverse break-up fee if the buyer is unable to close the deal.

Avis planned to reach out to Dollar Thrifty on Thursday to work toward a negotiated deal, a source familiar with the matter told Reuters on Thursday

Shares of Dollar Thrifty rose 4 cents to $50.14, while Hertz fell 8.8 percent to $10.59. Avis was up 1.1 percent at $11.65.

"We respect the vote of our shareholders and remain confident in our ability to continue to deliver outstanding value for them," Dollar Thrifty Chief Executive Scott Thompson said in a statement. "We will evaluate all of our options going forward in order to maximize value for Dollar Thrifty shareholders."

About 41 percent of Dollar Thrifty's shares outstanding were voted in favor of the offer, while about 48 percent were voted against the deal, according to the firm that tabulated the vote.

The Hertz bid was worth about $50.30 in cash and stock for each Dollar Thrifty share, while Avis has bid about $53.41 for each Dollar Thrifty share.

Hertz CEO Mark Frissora said in a statement that once the final confirmation of the vote results took place, the company would focus on rapidly accelerating the expansion of its own low-cost brand, Advantage Rent-a-Car, and the U.S. off-airport business.

If it had won the vote, Hertz had planned to sell Advantage

to alleviate antitrust concerns.

DELAYED VOTE

Dollar Thrifty was one of the few major car rental companies to post a profit in 2009. Companies like Dollar Thrifty that offer cheap car rentals have become increasingly important in the rental industry as consumers try to save money in tight economic times.

"On a stand alone basis, Dollar Thrifty is very well run and a very valuable company. I think it has a lot of strategic value to both Avis as well as Hertz," said John Healy, an analyst at Northcoast Research. "In time there will be a turn to consolidation. The question is will it happen a month from now in another deal, or will it happen a year from now?"

At various points during the takeover battle, Avis' bid has been significantly higher than the Hertz bid, but Dollar Thrifty has yet to agree to a deal with the company. The lack of a reverse breakup fee in its previous bids has been one reason Dollar Thrifty cited for its repeated rejections.

(Editing by Steve Orlofsky, John Wallace and Bernard Orr)