Hertz (HTZ) to Acquire Dollar Thrifty (DTG) for $87.50/Share; Hertz to Divest Advantage Business

August 27, 2012 6:16 AM EDT
Hertz Global Holdings, Inc. (NYSE: HTZ) and Dollar Thrifty Automotive Group, Inc. (NYSE: DTG) entered into a definitive merger agreement under which Hertz would acquire Dollar Thrifty for $87.50 per share in cash in a transaction valued at a corporate enterprise value of approximately $2.3 billion.

The combination of Hertz and Dollar Thrifty will create a global, multi-brand rental car leader offering customers a full range of rental options through its strong premium and value brands. The boards of directors of both companies have unanimously approved the transaction.

The deal ends the multi-year takeover saga between Hertz, Dollar Thrifty and Avis (NYSE: CAR). The buyout battle started in April of 2010, when Hertz reached a deal to acquire Dollar Thrifty for $41 per share. By the summer of that year, Avis stepped-up with a higher $46.50 per share offer. Bidding continued to rise until Hertz upped the stakes to $72 per share in May 2011. Avis backed away in the Fall of 2011, leaving Hertz and Dollar Thrifty sharholders to hammer out a deal.

Hertz also announced today that it has reached an agreement to sell the Advantage business to Franchise Services of North America ("FSNA") and Macquarie Capital. FSNA is an experienced rental car operator with subsidiaries including, among others, U-Save, Rent-a-Wreck, Practicar and X Press Rent-a-Car. The closing of that divestiture is conditioned upon, among other things, Hertz completing an acquisition of Dollar Thrifty.

The combination is expected to create significant synergy opportunities, including higher productivity and efficiency from shared assets, the elimination of duplicate functions and better deals from suppliers. The company anticipates at least $160 million of annual cost synergies from the transaction, with additional sales growth opportunities.

The transaction has been structured as a two-step acquisition including a cash tender offer for all outstanding shares of Dollar Thrifty common stock followed by a cash merger in which Hertz would acquire any remaining outstanding shares of Dollar Thrifty common stock. The transaction is subject to the tender of at least a majority of the shares of Dollar Thrifty common stock, as well as other customary closing conditions. The successful completion of the transaction is also subject to regulatory clearance by the Federal Trade Commission. Hertz has remained closely engaged with the FTC to secure antitrust clearance for the proposed transaction and Dollar Thrifty will fully cooperate in the process.

LazardBarclays, Bank of America Merrill Lynch and Deutsche Bank are acting as financial advisors to Hertz. Barclays will serve as dealer manager for the tender offer. Barclays, Bank of America Merrill Lynch and Deutsche Bank will provide financing for the transaction. Cravath, Swaine & Moore LLP, Debevoise & Plimpton LLP and Jones Day are acting as legal advisors to Hertz.

J.P. Morganand Goldman, Sachs & Co. are acting as financial advisors to Dollar Thrifty. Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor to Dollar Thrifty.

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