Newspaper article THE JOURNAL RECORD

Avis Makes Move to Outbid Hertz for Tulsa-Based Dollar Thrifty

Newspaper article THE JOURNAL RECORD

Avis Makes Move to Outbid Hertz for Tulsa-Based Dollar Thrifty

Article excerpt

On April 19, Avis Budget Chairman and CEO Ronald Nelson set a date for dinner with Dollar Thrifty Group President and CEO Scott Thompson.

They did not have dinner as scheduled on April 28, because two days earlier, on April 26, Hertz made the announcement that it was buying DTG for $1.17 billion. Hertz said it was paying $41 per share in a cash-and-stock deal.

That incident came out in a letter released on Monday by Avis Budget Group Inc. In the letter to top executives at Dollar Thrifty, Avis said it wants Dollar Thrifty to open its books before it counters the $1.17 billion offer from Hertz Global Holdings. Avis said Dollar Thrifty sold itself too cheaply to Hertz. And Nelson wrote that Avis "would like to make a substantially higher offer to acquire Dollar Thrifty" than Hertz.

Dollar Thrifty shares surged more than 15 percent on the news.

Dollar Thrifty shares rose $6.71 a share, or 15.25 percent, to $50.70, in trading Monday on the New York Stock Exchange. The volume of DTG shares traded was nearly 4.6 million - four-and-a-half-times more than the average daily volume. Avis Budget, based in Parsippany, N.J., fell 4 cents, or 0.26 percent, to $15.08, while Park Ridge, N.J.-based Hertz slumped 86 cents, or 5.95 percent, to $13.60.

Tulsa securities analyst M. "Jake" Dollarhide was not surprised by the announcement.

"The market was telling us, as the stock price started trading above $41 a share - that either the shareholders would reject the deal because they thought it was too low, or a competitor would try to outbid Hertz," Dollarhide said.

Dollarhide, the chief executive officer of Tulsa-based Longbow Asset Management, said Avis could start a parade of possible suitors lining up for a chance to purchase Dollar Thrifty.

"Avis and Hertz are longtime rivals. One scenario could see Avis try to outbid Hertz by $2 to $3 a share," Dollarhide said. …

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