Hertz Remains In the Driver’s Seat In Bid to Merge with Dollar Thrifty

It appears Hertz still has more “pull” than Avis in their acquisition tug-of-war over Dollar Thrifty Automotive Group, according to an open letter sent by the Dollar Thrifty’s president and CEO Scott Thompson to Avis Budget Group Chairman/CEO Ronald Nelson.

Reflecting the opinions of Dollar Thrifty’s board of directors, Thompson wrote that while Avis’ most recent bid to merge with his company was welcome and appealing on several levels, there are still serious misgivings that work against Avis’ offer as a “superior proposal” to that already in the works with Hertz. The biggest impediment is Avis’ refusal to offer a reverse-termination fee.

Thompson wrote: “More problematic is Avis Budget’s unwillingness to provide a reverse termination fee. As we have stated on several occasions, our board accords substantial weight to the extent to which Avis Budget is willing to share the risk of the ultimate regulatory outcome.”

This negative apparently outweighed Avis Budget’s bid regarding transaction price as well as the likelihood of sufficient financing forthcoming. Ultimately, the Dollar Thrifty chieftain concluded: “Avis Budget’s unwillingness to provide a reverse-termination fee, coupled with (its) disinclination to provide analytical data supporting (its) antitrust position, leaves us incapable of making such an assessment (that the Avis Budget offer constitutes a “superior proposal”).

However, even though Hertz and Dollar Thrifty executed a definitive merger agreement this past April under which Hertz will acquire Dollar Thrifty for $25.92 per share in cash, a special cash dividend to be paid immediately prior to the transaction closing representing approximately $6.88 per share, and 0.6366 shares of Hertz common stock, the door was perhaps left open for a subsequent Avis Budget bid, as Thompson wrote: “We stand ready to review and consider any modifications (Avis Budget) may wish to make to (its) proposal (or any additional supporting information) to address these concerns.”