CAR RENTAL company Avis Budget Group raised its bid for Dollar Thrifty Automotive Group three per cent to $1.35bn (£877m), as it looks to wrest the company from rival Hertz Global Holdings.
Avis raised the cash portion of its bid by $1.50 to $40.75 a share on yesterday. The stock portion of the deal remains unchanged at 0.6543 Avis share for each Dollar share, bringing the total offer up to $47.44 as of yesterday morning.
The Avis bid is now 22 per cent higher than the deal Dollar Thrifty agreed to with Hertz in April. Dollar Thrifty rebuffed Avis’ previous bid last month, even though it was the higher offer, on worries that Avis would not be able to close the deal for antitrust reasons.
The company also said then that Avis’ unwillingness to offer a reverse breakup fee was problematic. Nevertheless, Avis refused to include a reverse termination fee in yesterday’s bid for the budget brand, arguing that the possible payment has nothing to do with certainty of closing.
Avis also said that it will further increase its offer if Hertz and Dollar Thrifty reduce the breakup fees they agreed to under their deal.
Low-cost brands like Dollar Thrifty – one of the few major car rental brands to post a profit in 2009 – have become increasingly important in the car rental industry as consumers try to save money in tight economic times.
Hertz’s offer is currently worth $38.83 a share, or about $1.11bn.
Both offers are below Dollar Thrifty shares, which were trading around $47.97 on the New York Stock Exchange yesterday.
Hertz this week raised doubts about Avis’ ability to get a deal passed by antitrust regulators.
City A.M. Reporter