Some Interesting Points From The Hertz Dollar Thrifty Deal

Hi all,

Hopefully the longest, drawn out takeover of all time will finally reach a climax this year. Hertz’s buyout of Dollar Thrifty will probably hit 3 years before all is said and done.

Many people within the industry are sceptical about the deal that turns the car hire market from 4 players to just 3 but only time will tell. Today I have spent a few hours looking through the proposed deal and thought I’d pick out a few details that I think are interesting.

Purchase Price

  • $87.50 per share purchase price (all cash)
  • P h Equity Value of $2.6 billion
  • Corporate Enterprise Value of $2.3 billion

Deal Structure

  • 100% cash consideration
  • No financing contingency – fully committed financing in place
  • Tender offer
  • Transaction close expected in Q4:12

Key Conditions

  • Antitrust clearance
  • Hertz has reached a definitive agreement to divest Advantage
  • Requires more than 50% of Dollar Thrifty’s outstanding shares be tendered

Transaction Benefits

  • Unanimously approved by the Boards of both companies
  • Premium value in cash to DTG shareholders
  • Highly attractive transaction for HTZ owners positive EVA
  • Including impact of Advantage divestiture (~$30 million of Corp. EBITDA)

Anticipated Timeline

File tender offer materials with the SEC and launch tender offer Early September
Receive FTC clearance for the transaction1 Mid-October
Complete tender offer and purchase Dollar Thrifty shares Mid-to-late October
Complete short-form merger Mid-to-late October

In Numbers

Hertz Dollar/Thrifty
Corporate Revenue $7.1B $1.5B (60% Dollar/40%

Thrifty)

Franchise Revenue $3.7B $700M
Avg. Corp. Fleet Units 615,600 107,154
Top 3 OEM Suppliers GM, Nissan,Toyota Ford, Chrysler, GM
Rental Car Locations 8,500 280
Employees 23,900 5,900
Markets Served Premium Commercial, Premium Leisure,

Insurance Replacement, Commercial Leasing,

Mid-tier

Value Leisure

Monthly/Hourly car rental

Mid-tier

Value Leisure

U.S.Airport Market Share 26% 11%

The final piece of info that I thought was interesting was this “Hertz expects to be on credit watch initially, but does not anticipate credit rating downgrade”.

Some interesting stuff there and I’m sure other pieces of information will come to light, especially when the FTC release their own report detailing why they allowed the deal to go through, as always I’ll keep you up to date.

regards,

James

 car hire USA

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