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UPDATE 2-Hertz gets Canadian antitrust OK to buy Dollar Thrifty
August 2, 2010 / 1:47 PM / 7 years ago

UPDATE 2-Hertz gets Canadian antitrust OK to buy Dollar Thrifty

* Says Canadian Competition Bureau issues no-action letter

* Avis also expected to get Canada approval

* Focus on U.S. antitrust clearance

(Recasts throughout; adds details, background, analyst comments)

By Megha Mandavia and A.Ananthalakshmi

BANGALORE, Aug 2 (Reuters) - Car rental company Hertz Global Holdings Inc (HTZ.N) said it got Canadian antitrust approval to buy budget brand Dollar Thrifty Automotive Group DTG.N, but did not say if it will top rival Avis Budget’s higher bid.

Hertz said it will continue to work towards completion of the Dollar Thrifty deal in the “near future.”

Last week, Avis Budget Group Inc CAR.N bettered Hertz Global Holding’s offer for Dollar Thrifty, but the bid price was still lower than Dollar’s then market price. [ID:nSGE66S0MN]

Hertz and Avis began the process to get antitrust approval in May and have both received “second requests” from the U.S. regulator.

Avis is also expected to get antitrust approval from Canada without any hurdles, but getting U.S. Federal Trade Commission’s (FTC) approval might be a challenge for both the companies despite their willingness to divest some businesses.

“One shouldn’t necessarily look at it and say that they got Canadian approval, so U.S. approval through the FTC is a given,” said Avondale Partners analyst Fred Lowrance.

“Canadian business is a much smaller piece of the overall pie.”

“It sounds like that has been a more intensive review and there is a lot more things the U.S. regulators seem to be concerned with at this point,” said Lowrance.

Last week, a Hertz spokesperson told Reuters the U.S. FTC was still reviewing information it provided at the regulator’s request, and there has been no further update. [ID:nSGE66S0K1]

Hertz has agreed to divest its Advantage brand and up to $175 million worth of revenue-generating business lines or locations, while Avis has agreed to give up as much as $325 million in revenue, to get antitrust clearance.

Industry players have raised concerns that both the deal attempts could draw a lot of scrutiny from antitrust authorities as the consolidation in the rental car business has been rapid. [ID:nSGE63T0J6]

Hertz is thought to have a clearer path to approval, because it mostly focuses on more expensive segments of the car rental market, while Avis already has a budget brand that competes with Dollar Thrifty.

The acquisition of Dollar Thrifty will lead to a situation where the top three players would control over 95 percent of the car rental market, with privately held Enterprise Rent-A-Car leading the pack.

“So at least for Hertz they can check this one off the list but the focus by them, by investors, by me is on the U.S. approval process,” said Lowrance.

Shares of Hertz were up 27 cents, or about 2 percent, at $12.01 on the New York Stock Exchange. Shares of Avis and Dollar Thrifty were also up 2 percent. (Reporting by A.Ananthalakshmi and Megha Mandavia in Bangalore; Editing by Prem Udayabhanu, Vyas Mohan)

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