Deja Vu In The Hertz And Dollar Rent A Car Deal

Hi all,

Its with a dreaded feeling of deja vu that I write this post, its over 3 months since I last spoke about the proposed Hertz/Advantage/Dollar/Thrifty takeover, sale thingy and still nothings really happened.

On the 1st August Hertz and DTAG (Dollar and Thrifty) released their quarterly reports, nothing odd about that and both companies had very good quarters. Dollar  reported a net income for the 2012 second quarter of $49.4 million, compared to net income of $42.5 million for the second quarter of 2011. The company also reported Corporate Adjusted EBITDA for the second quarter of 2012 of $88.3 million, up from $81.2 million in the second quarter of 2011. Hertz meanwhile reported second quarter 2012 worldwide revenues of $2.2 billion, an increase of 7.4% year-over-year. Both companies taking full advantage of a very buoyant second hand car market.

The part that was missing in both their second quarter market calls was any proper mention of firstly; the continued process of the merger between Hertz and Dtag and secondly; the proposed sale of Advantage Rent A Car (Hertz’s economy brand).

In their first quarter report Hertz mentioned they had been in talks with a potential buyer of Advantage Rent A Car, thought to be U-Save Car Rental but not confirmed. Rumour also had it that the sale would move forward very quickly but since then nothing seems to have happened… Could the deal of gone cold?

Hertz did state

Hertz remains engaged with the FTC to secure antitrust clearance to potentially acquire Dollar Thrifty, which requires, among other things, the divestiture of our Advantage business.

However Dollar’s CEO Scott Thompson according to popular blog auto rental news,

expressed unusual candor – and exasperation. Aside from joking about his hair loss over the issue, he said the company has lost employees and has been negatively impacted when negotiating with strategic partners. He said no offer has been extended, and called for an end to this three-year-long saga.

So we look no closer to an end to the on off saga, but I will of course keep you updated if anything else arises.

regards,

James

 car hire USA

Avis Budget’s Response To Hertz’s Comments Over Dollar Thrifty


Hi all,

Interesting statement from Avis Budget today -

Hertz has today stated that if the Dollar Thrifty stockholders reject the Hertz merger, Hertz will end all efforts to acquire Dollar Thrifty.  Based on this commitment, Avis Budget is now prepared to agree to pay a reverse termination fee of $20 million in a merger agreement with Dollar Thrifty.  Avis Budget has always said that as long as Hertz had matching rights, Avis Budget would not consider a reverse termination fee.  Now that Hertz has in effect eliminated those matching rights, Avis Budget is prepared to offer such fee.
 
If Dollar Thrifty stockholders do not approve the Hertz transaction at the special meeting tomorrow:
 
1. Avis Budget will continue to actively pursue the acquisition of Dollar Thrifty, including commencing an exchange offer at our recent offer price no later than 10 business days after the meeting.  Such offer will be subject only to the conditions in the merger agreement previously provided (as adjusted for an exchange offer structure with a minimum tender condition, for modification of credit agreements, and to assure that Hertz honors the commitments made in its statement earlier today) and the Dollar Thrifty disclosure schedules previously delivered to us.
2. Avis Budget will continue to actively pursue antitrust clearance.  As previously disclosed, Avis Budget has committed to sell assets representing $325 million of revenues (of which not more than $250 million are U.S.), demonstrating our commitment to attaining antitrust approval.
3. Avis Budget will commit to sign the merger agreement previously provided, with an additional provision to assure that Hertz honors the commitments made in its statement.
4. In light of continuing questions related to reverse termination fees, Avis Budget will agree to pay a $20 million reverse termination fee in the merger agreement with Dollar Thrifty.

Who will win the battle…

regards,

James

 car hire USA


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