Hertz has signed a definitive agreement to acquire Dollar Thrifty Automotive Group for $1.2 billion, the companies announced today, a move analysts said should give buyers a wider range of pricing options when negotiating with the car rental company.
The deal, pending regulatory and Dollar Thrifty stockholder approval, gives Hertz control of the two brands at $41 per share. Hertz chairman and CEO Mark Frissora said in a conference call today that the acquisition "fills a gap in our product portfolio, with a strong mid-tier option. Together, we'll be able to compete even more effectively, offering a wide range of rental options."
Car rental consultant Neil Abrams of Abrams Consulting Group said the two companies complement each other well. Hertz has a strong corporate midweek business, while Dollar Thrifty is stronger for weekend leisure business. Additionally, Dollar Thrifty would benefit from Hertz's investment in off-airport business, he said.
Frissora said the deal also would boost Hertz's global network to almost 10,000 locations across six continents. Combined, the companies have about $180 million in synergies between fleet, IT and procurement, he said.
Abrams said travelers would probably notice little change on the customer-facing end, but buyers might find additional opportunities when negotiating with Hertz. "Depending on what they decide to do with the brand, they could do what Avis did with Budget, providing a lower-priced corporate brand with less bells and whistles but still providing services a corporate buyer needs," he said. "The potential to have that lower-priced corporate offering is very compelling."
Though the deal reduces the major U.S. car rental landscape to three companies—Hertz, Avis Budget and Enterprise, which owns the National and Alamo brands—Abrams said he expected Hertz to maintain pricing integrity with the Dollar Thrifty brands.
Hertz last year acquired Advantage Rent A Car for $33 million (BTNonline, April 10, 2009)
and has since invested to grow the brand, priced in a tier below Dollar Thrifty.