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UPDATE 2-FTC seeks more info on Avis's Dollar Thrifty deal
June 15, 2010 / 11:41 AM / 7 years ago

UPDATE 2-FTC seeks more info on Avis's Dollar Thrifty deal

(Adds share movement, analyst quotes)

By Bijoy Anandoth Koyitty

BANGALORE, June 15 (Reuters) - Avis Budget CAR.N said the U.S. Federal Trade Commission sought additional information on its potential acquisition of smaller rival Dollar Thrifty Automotive Group Inc DTG.N.

Avis Budget continues to cooperate with the Federal Trade Commission in its review of this potential transaction, the No. 2 car rental company in the United States said.

Dollar Thrifty is being wooed by both Avis Budget and the No. 3 car rental firm, Hertz Global Holdings Inc (HTZ.N), with Avis looking to defend its market share and Hertz aiming to displace Avis. [ID:nSGE6420H6]

“It is part of the process. It says the FTC is really looking at it. FTC has not come out with a ruling,” Avondale Partners LLC analyst Bob McAdoo said by phone. “At this point, I would not take it one way or the other.”

After Avis had indicated it was considering a bid for Dollar Thrifty, analysts had raised concerns that a potential deal could draw scrutiny from antitrust authorities.

Avis Budget shares have lost about 30 percent of their value since mid-May mainly on the recent economic instability, and the falling share price could make a stock bid difficult. [ID:nN25202410]

Sidoti & Co analyst Stephen O‘Hara said the biggest “catalyst” for the stock would be Avis Budget’s acquisition of Dollar Thrifty.

“Until this issue is solved, we expect Avis Budget’s volatility to remain high.”

The analyst added that the stock, however, offers an “attractive” entry point due to improving fundamentals such as the air traffic trends.

“We point to airline traffic data, which continue to show stronger demand for air travel. Airlines are flying more seats and charging more for those seats,” O‘Hara, who has a “buy” rating on the stock, wrote in a note to clients.

The car rental market in the United States is dominated by privately held Enterprise, which has a market share of 31 percent.

Shares of Avis Budget were trading up 2 percent at $11.56 on the New York Stock Exchange. (Reporting by Bijoy Koyitty in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)

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