* Avis offers $46.50 a share for Dollar Thrifty
* Total deal value of $1.33 billion
* Offer still below Dollar's last closing price
(Adds analyst comment, details about antitrust, background)
By Michael Erman and A. Ananthalakshmi
NEW YORK/BANGALORE, July 28 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 extended trading.
Avis said its bid provides a premium of about 17 percent to
the value of the Hertz offer, which is 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
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.
Avis, which amended its credit facility earlier this week
for the bid, said the cash portion of its offer will be funded
through a combination of available cash and fully committed
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.
"There was speculation that it (Avis' offer) would be
higher than that," said Neil Abrams, an analyst with Abrams
Consulting Group. "But obviously it's a more than 10 percent
premium over Hertz's offer, which is something that the
shareholders have to think about and certainly challenge the
management of Dollar Thrifty about."
Whether or not either company can receive antitrust
approval will also be key in determining who will walk away
with Dollar Thrifty.
Both bids could draw close scrutiny from authorities as the
consolidation in the rental car business has been rapid.
But Hertz is thought to have a clearer path to approval
because it mostly focuses on more expensive segments of the car
rental market. Avis already has a budget brand that competes
with Dollar Thrifty.
Hertz and Avis have already begun the process of getting
antitrust approval and have both received "second requests"
from the regulator.
Privately held Enterprise Rent-A-Car has the largest piece
of the U.S. car rental space, with a market share of 31
percent. A Dollar Thrifty buyout could lead to a scenario where
just three companies -- Enterprise, Avis and Hertz -- control
almost all of the car rental market.
Hertz has agreed to divest its Advantage brand and up to
$175 million worth of revenue-generating business lines or
locations to get antitrust clearance.
If it ends up with Dollar Thrifty, Avis would have four
brands and the biggest share in the budget rental market.
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
Dollar Thrifty is being advised by Citigroup and Morgan
(Editing by Savio D'Souza, Carol Bishopric and Richard Chang)