Avis Budget Group on Thursday upped the cash portion of its
offer to acquire Dollar Thrifty Automotive Group and rebuffed analysis Hertz
issued earlier this week that Avis Budget would face more difficulty with
antitrust approval than Hertz in the acquisition.
Under its new offer, Avis Budget will pay shareholders
$40.75 cash per share, instead of the previously offered cash portion of $39.25
per share, along with 0.6543 shares of Avis Budget stock, which Avis Budget said
is a 22 percent premium over the Hertz Global Holdings' offer. Hertz in April
signed an agreement with Dollar Thrifty to acquire it at $40 per share, or about
$1.2 billion, and Avis Budget posed its initial counteroffer in July.
"The Avis Budget offer is clearly superior to the Hertz
offer in the two ways that matter: We are offering a substantially higher price
and a more meaningful divestiture commitment," Avis Budget said in a statement.
Hertz, meanwhile, issued a presentation on Tuesday saying
that an Avis Budget/Dollar Thrifty merger faces a higher antitrust risk than a
Hertz/Dollar Thrifty merger. Hertz said pricing data show that an Avis Budget
acquisition would give Avis Budget and Enterprise—through the Budget, Dollar,
Thrifty, Alamo and Enterprise brands—total control of the airport leisure
segment.
"If Avis Budget merges with Dollar Thrifty, all of
these brands and, thus, the value leisure segment, will be controlled by either
Avis or Enterprise, and that's a bad deal for car rental customers," Hertz
chairman and CEO Mark Frissora said in a statement. "One can only conclude
that Avis Budget knows it will have a difficult, if not impossible task, to
finalize a merger with Dollar Thrifty without divesting a large brand or
without a revenue carve-out, perhaps exceeding well over $500 million."
In its statement today, Avis Budget countered that Hertz and
Avis Budget have similar airport and leisure revenue shares and that Hertz competes
at Dollar Thrifty's price point through its relationship with AAA.
"In its update, Hertz cherry-picks data and time
periods and uses deeply flawed modeling to present baseless and inflated
divestiture numbers for an Avis Budget transaction," Avis Budget said in
its statement. "Proper economic analysis shows that Hertz and Avis Budget
are comparably competitive with Dollar Thrifty, and Hertz invents new industry
segmentation, artificially grouping Dollar and Thrifty together with Budget to
try to manufacture an antitrust issue, knowing full well that Budget and Alamo
are positioned as midtier brands while Dollar, Thrifty and Enterprise—on all
relevant metrics—are in a value segment that falls below the midtier."
Dollar Thrifty shareholders will vote whether to approve
Hertz's offer on Sept. 16. Avis Budget said it would sign its merger agreement
within five days of that meeting should shareholders reject Hertz's offer.