Car rental firm Hertz Global Holdings Inc (HTZ.N) withdrew its tender offer for shares in Dollar Thrifty Automotive Group DTG.N, but said it was still interested in buying its smaller rival if antitrust regulators clear the deal.
Hertz cited Dollar Thrifty's share buyback plans and current market conditions for withdrawing the exchange offer, and said it would reassess the price and terms of a deal once it gets approval. Its last offer for Dollar Thrifty was worth around $1.94 billion.
"Hertz continues to believe that a merger with Dollar Thrifty is in the best interests of both companies," it said in a statement. It said it was still in talks with the U.S. Federal Trade Commission to win approval for a deal.
Hertz and Avis Budget (CAR.O), the second- and third-biggest U.S. car rental firms behind privately-held Enterprise, had been scrapping for months over Dollar Thrifty, which is seen as the last prize in an industry that has consolidated in recent years.
With the acquisition of fourth-ranked Dollar Thrifty, Hertz would narrow the gap behind Enterprise, while Avis would have leapfrogged Hertz into second place.
But antitrust concerns have hung over the bidding race, as a takeover of Dollar Thrifty would leave only three players dominating a $21 billion market.
Earlier this month, Dollar Thrifty halted a process to sell itself, and announced a $400 million share buyback program, after failing to get final acquisition proposals. Avis Budget dropped out, citing volatile debt markets and its $1 billion acquisition of its European arm.
Hertz was always seen the more likely to win regulatory clearance as it serves the high-end rental market, and is already in the process of selling its low-cost Advantage brand.
Hertz re-entered the race for Dollar Thrifty earlier this year, but went hostile after Dollar Thrifty management refused to recommend the offer to its shareholders. Its initial offer was rejected by Dollar Thrifty shareholders as too low.
As of September 9, Hertz had received 2.6 million Dollar Thrifty shares under the exchange offer. In a filing on Thursday, it said it will return those shares.
Dollar Thrifty shares fell 3 percent to $59.65 on Thursday on the New York Stock Exchange, while Hertz rose 8 percent to a 12-week high of $11.85.
(Reporting by A. Ananthalakshmi in Bangalore; additional reporting by Fareha Khan, Editing by Ian Geoghegan)