BANGALORE/NEW YORK, Sept 27 (Reuters) - Car rental company Dollar Thrifty Automotive Group appears primed to be acquired by rival Hertz Global Holdings after rejecting Avis Budget Group's latest takeover offer.
The Avis bid is about 4 percent higher than the deal Dollar Thrifty has agreed to with Hertz, but the company stood by the lower offer because it feels Avis would have difficulty in closing a deal for antitrust reasons.
'As of today, Dollar Thrifty shareholders are likely to vote for Hertz,' said Avondale Partners analyst Fred Lowrance, adding that deal certainty was a big thing for Dollar Thrifty.
He said at this point, it's almost a vote between 'do we go ahead and take the cash from Hertz' or 'do we take our chances as a standalone company.'
Dollar Thrifty shares, which have risen 31 percent since Hertz announced its initial offer, closed at $50.79 Monday on the New York Stock Exchange -- almost in line with the Hertz offer.
Arbitrage investors contacted by Reuters said they believed the Hertz bid should receive shareholder support at the Thursday meeting.
Dollar Thrifty's shareholders are set to vote on the Hertz deal at a meeting scheduled for Sept. 30.
In a separate statement, Avis said it is willing to pursue antitrust clearance if the shareholder meeting is postponed to Dec. 30.
If the meeting goes ahead on Sept. 30 and the Hertz deal is not approved, Avis said it would commit to commence an exchange offer at its recent offer price no later than 10 business days after the meeting.
ANTITRUST MATTERS
Dollar Thrifty has rejected Avis' two previous offers, saying a lack of break-up fee constitutes to Avis not being confident of closing the deal due to regulatory issues.
'Avis Budget has not demonstrated to our satisfaction that its proposed transaction can be completed in a timely manner,' Dollar Thrifty said.
Hertz is thought to have a clearer path to getting antitrust approval because it mostly focuses on more expensive segments of the car rental market. Avis already has a budget brand that competes with Dollar Thrifty.
Avis has so far refused to include the reverse termination fee in its bid for the budget brand, arguing that the possible payment has nothing to do with certainty of closing.
Avondale's Lowrance said recent and past history would suggest that the chances of Avis coming back with a break-up fee were slim to none.
'But if they really want to acquire Dollar Thrifty, they know that is what they have to do and they have got two days left to do it,' said Lowrance.
Last week, Avis Budget raised its bid to about $1.52 billion, or $53.09 per share, based on Avis' last closing price, but refused to include a break-up fee.
Hertz said its raised bid earlier this month -- currently worth about $1.46 billion or $50.78 a share -- was its 'best and final' offer.
Hertz stock closed up 1 percent at $11.28, while Avis closed up slightly at $11.15.
(Reporting by A.Ananthalakshmi in Bangalore and Michael Erman in New York; Editing by Gopakumar Warrier) Keywords: DOLLARTHRIFTY/ (ananthalakshmi.as@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: ananthalakshmi.as.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The Avis bid is about 4 percent higher than the deal Dollar Thrifty has agreed to with Hertz, but the company stood by the lower offer because it feels Avis would have difficulty in closing a deal for antitrust reasons.
'As of today, Dollar Thrifty shareholders are likely to vote for Hertz,' said Avondale Partners analyst Fred Lowrance, adding that deal certainty was a big thing for Dollar Thrifty.
He said at this point, it's almost a vote between 'do we go ahead and take the cash from Hertz' or 'do we take our chances as a standalone company.'
Dollar Thrifty shares, which have risen 31 percent since Hertz announced its initial offer, closed at $50.79 Monday on the New York Stock Exchange -- almost in line with the Hertz offer.
Arbitrage investors contacted by Reuters said they believed the Hertz bid should receive shareholder support at the Thursday meeting.
Dollar Thrifty's shareholders are set to vote on the Hertz deal at a meeting scheduled for Sept. 30.
In a separate statement, Avis said it is willing to pursue antitrust clearance if the shareholder meeting is postponed to Dec. 30.
If the meeting goes ahead on Sept. 30 and the Hertz deal is not approved, Avis said it would commit to commence an exchange offer at its recent offer price no later than 10 business days after the meeting.
ANTITRUST MATTERS
Dollar Thrifty has rejected Avis' two previous offers, saying a lack of break-up fee constitutes to Avis not being confident of closing the deal due to regulatory issues.
'Avis Budget has not demonstrated to our satisfaction that its proposed transaction can be completed in a timely manner,' Dollar Thrifty said.
Hertz is thought to have a clearer path to getting antitrust approval because it mostly focuses on more expensive segments of the car rental market. Avis already has a budget brand that competes with Dollar Thrifty.
Avis has so far refused to include the reverse termination fee in its bid for the budget brand, arguing that the possible payment has nothing to do with certainty of closing.
Avondale's Lowrance said recent and past history would suggest that the chances of Avis coming back with a break-up fee were slim to none.
'But if they really want to acquire Dollar Thrifty, they know that is what they have to do and they have got two days left to do it,' said Lowrance.
Last week, Avis Budget raised its bid to about $1.52 billion, or $53.09 per share, based on Avis' last closing price, but refused to include a break-up fee.
Hertz said its raised bid earlier this month -- currently worth about $1.46 billion or $50.78 a share -- was its 'best and final' offer.
Hertz stock closed up 1 percent at $11.28, while Avis closed up slightly at $11.15.
(Reporting by A.Ananthalakshmi in Bangalore and Michael Erman in New York; Editing by Gopakumar Warrier) Keywords: DOLLARTHRIFTY/ (ananthalakshmi.as@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: ananthalakshmi.as.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.