Posts Tagged ‘Dollar Thrifty’

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Avis no longer interested in Dollar Thrifty

Thursday, September 15th, 2011

American car rental giant Avis has decided to pull out of the race to acquire budget rival Dollar Thrifty. According to the company it has withdrawn its $1.6 billion bid because the market conditions are unfavourable at the present time. Hertz Global is now the favourite to take over the firm.

Industry consultant, Neil Abrams, said Avis had also become frustrated by the process of trying to obtain antitrust approval from the authorities. Recent consolidation of the car hire business in the US means that there are only four major companies: Avis, Hertz, Dollar and Enterprise. Regulators are concerned that further consolidation will have a negative impact on the consumer.

Hertz and Avis have been keen to get their hands on the leisure market which Dollar successfully penetrates. Both of the larger firms are more geared to corporate customers. Dollar currently controls around 13 per cent of the US airport rental market relying on customers looking for a cheap deal rather than the latest model. Hertz is still to comment on the decision by Avis to withdraw its bid but has said it is continuing to seek approval from the Federal Trade Commission for a take over.

Earlier in the year Avis declared that it was to acquire its European counterpart. The company is currently seeking financing for the £636 million deal which is possibly another reason why it has pulled out of the race for Dollar.

Mr Abrams said that although the global economy remained shaky, the demand for rental vehicles was remarkably robust.

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Hertz extends offer for Dollar Thrifty

Tuesday, July 12th, 2011

Car hire firm Hertz has indicated that it is not yet ready to give up the fight for control of Dollar Thrifty. The company said it would be extending its tender offer for the budget rental firm by a month. The exchange offer is viewed as a formality as Hertz will not be able to acquire Dollar unless it receives board approval due to a shareholder rights plan.

Avis is also in the running to takeover Dollar, but its recent $1 billion acquisition of Avis Europe has caused speculation that the rental company may not wish to enter a higher bid. Avis is yet to produce a counter offer to Hertz’s.

In May, Hertz offered $2.08 billion for Dollar having had a previous offer rejected by stake holders. The problem for all three companies is that nothing can happen until US antitrust regulators complete their investigations into how a takeover will affect competition.

The US Federal Trade Commission is concerned that consolidation of the car hire market has resulted in only four major rivals remaining: Enterprise, Avis, Hertz and Dollar. Seeing Dollar absorbed by one of its rivals is therefore worrying to those concerned with how less competition will impact on the consumer.

Because of the extension, the Hertz offer of $71.50 per share for Dollar will now expire on 5 August. The New York Stock Exchange on Monday saw Dollar shares being traded at $73.55. Although a small drop in price was recorded, it is still above the Hertz offer.

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Avis Budget offers $1 billion for Avis Europe

Wednesday, June 15th, 2011

US car hire group, Avis Budget, has declared its intentions to buy Avis Europe by making an offer of 315 pence per share. The $1 billion deal will reunite the Avis brand across the Atlantic for the first time since 1986 when they split. The takeover offer has been given the nod by 60 per cent owner of the European division D’Ieteren, a Belgian based dealership.

Avis Europe boss, Pascal Bazin, said the deal would be good news for car hire customers who would benefit from a stronger global presence. The merging of the two companies would see Avis serving customers in more than 150 different countries around the globe. Mr Bazin added that it was also good news for Europe because there was now the potential to grow the brand in ways that the firm was unable to do in the past.

The buyout will also generate some $30 million in cost savings every year, according to Avis Budget, and will generate worldwide sales of $7 billion. Mr Bazin said it would also mean that there will be improved strategic benefits as well as more access to capital.

The move comes as Avis is still tied up in a long running battle with US rival Hertz over acquisition of budget hire company Dollar Thrifty. The two sides have been in talks with Dollar about a takeover, but neither has been able to secure antitrust approval from the US regulators.

Avis is currently the third largest rental company in the US ahead of Dollar Thrifty and behind Enterprise and Hertz.

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Avis steps in to acquire Dollar Thrifty

Thursday, October 7th, 2010

Dollar Thrifty’s management was foiled in its attempts to reach a deal with Hertz last week by its own shareholders. The day before the vote on whether to accept Hertz’s offer, which equated to $50.88 per share, Hertz announced that the offer would be its last. It is believed that shareholders voted against the offer because Avis had announced that its counter offer of $53 per share would remain on the table.

Avis has said it will now work with Dollar Thrifty to persuade antitrust regulators that a tie up will not breach competition guidelines. The antitrust issue is believed to be one of the main reasons Dollar Thrifty’s board favoured a deal with Hertz, even though Avis has offered more money for the firm.

Dollar Thrifty has asked Avis not to pursue its bid until the authorities give approval for a deal. Avis has said it is willing to wait.

The battle for Dollar Thrifty has been going on for months. Both Hertz and Avis believe the acquisition of a budget car hire brand like Dollar will help grow revenue at a time when the business traveller is noticeably absent.

Consolidation is also seen by many as a way of ensuring future growth. In 2002, the company which owns Avis bought the Budget brand. In 2007, Enterprise’s parent acquired Alamo and National. According to IBISWorld, Enterprise and its subsidiaries now have a market share of 37 per cent; Hertz owns 20 per cent and Avis currently has 17 per cent. Dollar Thrifty has less than seven per cent.

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Hertz offer for Dollar Thrifty not good enough for investors

Monday, October 4th, 2010

Car hire firm Hertz has seen its latest bid for Dollar Thrifty refused by the company’s shareholders who delivered a no vote on the takeover last Thursday. Hertz had offered stock and cash for the budget rental firm worth $50.88 per share. However this was not good enough for the majority of Dollar Thrifty’s investors.

Hertz’s board will have been disappointed by the decision because they have always supported a takeover by Hertz. Rivals Avis last week increased its offer for the company to around $53 per share. It has also included a $20 million reverse termination fee. Scott Thompson, Dollar Thrifty’s CEO, said it was time to reassess the company’s options and maximise the firm’s value for its shareholders.

Mark P Frissora, Hertz’s CEO, said the company wanted to start concentrating on its off-airport business. Before the vote, Hertz said the offer it had made would be its final one. Avis confirmed the day before Dollar Thrifty’s shareholders cast their ballots that it would remain in the running and that its offer would remain on the table.

Hertz and Avis are keen to acquire Dollar Thrifty because its main customer base is the leisure market. Since to global recession, the business traveller, the customer on whom Hertz and Avis have always concentrated their efforts, has been noticeably absent. Leisure travellers, by contrast, are still spending.

The car hire market peaked in 2007 with revenues of around $30 billion, according to market analysts IBISWorld. In 2010, revenues dropped to around $25 billion. This is encouraging rental companies to look at consolidation as a way of increasing their share of a dwindling pot.

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Avis offers break-up fee for Dollar deal

Thursday, September 30th, 2010

Shareholders in the Dollar Thrifty car rental group are due to vote today on a takeover bid offered by rivals Hertz. Although the company’s management has said it is in favour, one of Dollar’s major shareholders has been voicing its doubts. PAR Capital Management, which owns 7.7 per cent of the firm, claims Hertz’s offer of around $1.5 billion in cash and shares will not give an adequate return to shareholders.

For the deal to go through, a majority vote is needed. If that vote is not achieved, then Hertz has said it will walk away from further negotiations. At the beginning of the month Hertz upped its offer for Dollar to around $50.95 per share.

Avis, the other car rental giant involved in negotiations with Dollar, has said that if Hertz walks away, it will include a reverse termination fee of $20 million in its offer for the firm. Avis has always stipulated that whilst its rivals were bidding for Dollar, it would not include a break-up fee.

Although Avis has been the firm offering Dollar shareholders a bigger return on their investment, Dollar’s management has remained loyal to Hertz. The main reason for this is the uncertainty over whether any deal with Avis would ever get the blessing of the regulators.

The other reason for Dollar’s management advising investors to reject Avis’ takeover moves was the lack of a reverse termination fee in their offer. This will no longer be an issue if Hertz decides to throw in its chips.

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US regulators look at potential Avis buyout of Dollar Thrifty

Friday, May 14th, 2010

Avis Budget has filed papers with US regulators for approval of a possible deal to purchase Dollar Thrifty. The car hire giant is looking for a green light from the antitrust agency to ensure that any possible purchase will not violate US antitrust laws. Dollar Thrifty Automotive Group has been at the centre of the car hire world recently as both Avis and rival Hertz have made gestures to purchase the number four rental car in the US.

While both companies have shown interest in Dollar Thrifty, both Avis Budget and Hertz Global Holdings Inc have significant antitrust hurdles to overcome before any merger takes place. Antitrust experts say that Hertz has a slight advantage since it is mainly a business traveller car hire firm, while if Avis takes control of Dollar Thrifty, it will put a stranglehold on its already strong leisure car hire market share.

Hertz made its original proposal to purchase Dollar Thrifty on 26 April, and the following week Avis Budget showed its interest in purchasing the company after two Dollar Thrifty shareholders claimed the offer was far below market value. The two car hire firms have since manoeuvred back and forth in their attempts to finalise a deal, causing significant trade movement on the NYSE. Dollar Thrifty closed at $49.42, Avis at $13.50, and Hertz at $12.93 on Thursday.

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Dollar Thrifty drives home top profits

Wednesday, May 12th, 2010

Car rental company Dollar Thrifty has announced quarterly profits that have run the competition off the road. The figures posted are far beyond those predicted by analysts and show that reducing fleet costs and improving demand have gone a long way to help the firm in these hard economic times.

 

After acquiring larger rival Hertz earlier this week, shares in Dollar Thrifty were up by three per cent to $43.60 – a two year high for the company. The firm is also expecting further moderate increases over this year from two to four per cent revenue growth.

 

The deal by Hertz to acquire Thrifty for $1.9 billion would make it one of the largest car rental firms in the world behind Enterprise Rent-A-Car. The deal is, however, currently on hold since rival firm Avis put in an apparently higher bid for Hertz.

 

Dollar Thirfy CEO Scott Thompson is however remaining positive, saying that he expects the transaction to close within the next 12 months and that the combination of brands is “very compelling.” He added that Dollar would be able to both increase and improve its services as part of a combined company.

 

Dollar’s full-year EBITDA outlook has shot up from $170 million to $190 million, with its first-quarter earnings sitting at 76 cents a share, no less than 46 cents above the amount predicted by analysts. Vehicle depreciation for the first quarter, however, was $206-a-month per unit.

 

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Dollar Thrifty eager to receive Avis buyout proposal

Wednesday, May 5th, 2010

Dollar Thrifty Automotive Group is ready to hear a buyout proposal from Avis, one week after Hertz submitted its bid for the car hire firm. Avis Budget Inc let Dollar Thrifty know of its intent to submit an offer that is reportedly substantially larger than that of its rival Hertz Global Holdings Inc.

A spokesperson for Dollar Thrifty responded to the 3 May letter from Avis announcing its intent to place a bid, and claimed that Avis misinterpreted events surrounding the potential deal between Hertz and Dollar Thrifty, most notably by the miscalculation of fees owed by Hertz regarding a potential deal-breakup. The announcement by Avis of its desire to acquire Dollar Thrifty has the potential to start a bidding war between the two car hire giants.

Avis’s interest in purchasing Dollar Thrifty lies in its ability to put a stranglehold on leisure travel car hires, an area in which Hertz is already lacking. A Hertz spokesperson acknowledged this fact by claiming that its primary focus is to settle on a deal with the car hire firm, and that antitrust issues would be at the forefront of any merger between Avis and Dollar Thrifty.

Dollar Thrifty shares have seen increased activity since talks of a buyout, and rose 1.7 per cent to $51.55 on the New York Stock Exchange. Avis fell 6.5 per cent to $14.10, while Hertz fell 25 per cent to $13.35.

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$200 million in new cars for Dollar Thrifty after subsidiary finalizes loan

Tuesday, April 13th, 2010

Rental Car Finance Corp, a subsidiary of Dollar Thrifty Automotive Group, finalized loans of $200 million, the bulk of which the car rental giant plans to use towards increasing the size of its fleet. The Rental Car Asset Backed Variable Funding Notes, Series 2010-1, are to be paid off starting in April 2012, with amortization payments scheduled to be completed in September of that year.

President and CEO of Dollar Thrifty Automotive Group Scott L Thompson stated that the company was pleased with the loan, since fleet purchases will now be at a rate below that of the current medium term notes. Thompson went on to say that this step confirms that Dollar Thrifty is once again able to procure competitive rates for its vehicle financing plans, which will ultimately prove to provide a higher rate of return on assets.

Dollar Thrifty has repaid half of its existing Series 2005-1 notes as of 31 March of 2010, and the $200 million which remain will be amortized through June 2010. Following the completion of the Series 2005-1 notes in June, the company sees the maturity of its Series 2006-1 notes beginning in December 2010.

The $200 million Series 2010-1 notes are rated AA by Dominion Bond Rating Service, Inc, had no upfront fees as part of the transaction, and have an advance rate of roughly 65 percent. Interest on the notes is 275 basis points higher than the purchasing conduit’s weighted average commercial paper weight.

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