Newspaper article THE JOURNAL RECORD

Hertz to Buy Oklahoma-Based Dollar Thrifty for $1.2B

Newspaper article THE JOURNAL RECORD

Hertz to Buy Oklahoma-Based Dollar Thrifty for $1.2B

Article excerpt

When Enterprise Rent-a-Car acquired Alamo and National a few years ago, it changed the rental car industry, said Scott Thompson, president and CEO of Dollar Thrifty Automotive Group Inc.

"And, it changed our competitive position," Thompson said.

Dollar Thrifty's relative size, compared to the Big Three in the industry - Enterprise, Avis and Hertz - made an offer to join a larger company compelling, Thompson said.

Dollar Thrifty made a move to being associated with a larger company when Hertz Global Holdings Inc. agreed to buy Tulsa-based Dollar Thrifty for $41 a share in a deal announced late Sunday night. The offer is worth $1.17 billion in cash and stock.

The deal will give rental giant Hertz an additional 1,550 additional locations, boosting its total to 9,800. Hertz said it will boost its leisure rental business in Europe.

The $41 per share is a 5.5-percent premium over Dollar Thrifty's Friday's closing price of $38.85. The offer is made up of 80- percent cash and 20-percent Hertz stock.

Corporate leaders say it's a win-win, but Mike Neal, Tulsa Metro Chamber president and CEO, said the immediate question for many concerns the 700 Dollar Thrifty jobs in Tulsa. Dollar Thrifty employs about 6,000 employees, mainly in North America, in about 300 locations in the U.S. and Canada.

Integration plans between Hertz and DTG are in the preliminary stages, Thompson said, "and will be dependent upon further analysis by Hertz on how best to run the combined business post-closing. I am sure Hertz will want the best people in this very competitive industry, and I would not expect any changes near-term. I would expect each company to learn from the other as they share best practices after closing."

The acquisition process will be long and tedious, Neal said.

"It's certainly too early to speculate about its outcome, but the chamber's No. 1 focus is to be supportive of a long-standing corporate partner and to aggressively pursue a relationship with a new successor," Neal said.

Shares of Dollar Thrifty recently have been trading at their highest prices in nearly three years. The stock was trading at $2 a little over year ago. It was valued at 60 cents a share at one time in March 2009.

Low demand for rentals and falling resale prices for vehicles, along with the problems facing its main supplier, Chrysler, made the company a likely takeover target, said securities analyst M. "Jake" Dollarhide, who is chief executive officer of Tulsa-based Longbow Asset Management.

"The company was priced for insolvency, bankruptcy or relevancy," Dollarhide said.

To their credit, DTS management took care of their problems, he said.

"They did not try to hide from them and it has paid off for them," Dollarhide said. "It is a great success story - it has been an incredible turnaround."

Dollar Thrifty stock is up more than 4,000 percent in the last 18 months and the market capitalization has gone from $23 million to over $1. …

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