(Reuters) - Hertz Global Holdings, the No. 2. U.S. car rental company, said it will buy smaller rival Dollar Thrifty Automotive Group for about $2.3 billion, ending more than two years of an on-off takeover battle.
Hertz and third-ranked Avis have made several offers for Dollar Thrifty, but until now they have been blocked by disagreements over price and doubts about regulatory approval.
Hertz (HTZ.N) will buy Dollar Thrifty DTG.N for $87.50 per share in cash, a premium of 8 percent over Dollar Thrifty’s Friday closing price of $81 on the New York Stock Exchange, and far higher than the $1.2 billion offer Hertz first made in April 2010.
Dollar Thrifty, the final big target in an industry that has consolidated rapidly, this month urged Hertz to end its failed takeover moves by making a compelling bid or letting it go ahead alone.
Several top Dollar Thrifty shareholders told Reuters last week they would accept a takeover offer from Hertz that valued the company at more than $87 per share.
“Hertz has made a compelling offer to our stockholders that reflects the strength of our business,” Dollar Thrifty Chief Executive Scott Thompson said in a statement.
In a bid to win regulatory approval for the deal, Hertz has agreed to sell its budget brand Advantage, which caters to the same market as Dollar Thrifty, to Franchise Services of North America FSNA.L and Macquarie Capital. Hertz did not specify the sale price.
Hertz said late on Sunday it expects at least $160 million of annual cost savings from the transaction. (Reporting by Sakthi Prasad in Bangalore; Editing by Daniel Magnowski)