Dollar Thrifty calls for end to takeover saga
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TULSA, Okla. (Reuters) -- Dollar Thrifty Automotive Group, considered the last big prize in the U.S. car rental industry, urged Hertz Global Holdings to put an end to two years of fruitless takeover offers by making a compelling bid to settle the matter once and for all.
Dollar Thrifty, which said today it has not received a buyout offer from any party this year, has attracted several bids from Hertz and Avis Budget Group in recent years, but antitrust issues have clouded the process.
Tulsa, Okla.-based Dollar Thrifty's takeover would leave just three players dominating more than 90 percent of the U.S. car rental market, led by privately held Enterprise Holdings.
"It is time for a compelling offer to be made or for this process to come to a close so that the company can move forward under its standalone plan without the constant distraction of merger speculation," Dollar Thrifty said in a statement.
A Hertz spokesman declined to comment.
Avis dropped out of the race last year after it bought its European arm for about $1 billion, while Hertz put its offer on hold saying it will wait for antitrust approval before making a final bid.
Dollar Thrifty officially ended its sale process in October, but Hertz's continued interest has fueled takeover speculation. Strong results have also helped prop up the stock price.
Hertz's last offer was valued at about $1.94 billion in October, while Dollar Thrifty's market value has now risen to about $2.12 billion.
Hertz CEO Mark Frissora, the former CEO of auto supplier Tenneco Inc., said on a post-earnings call earlier this week that the company was still interested in acquiring Dollar Thrifty and it was in talks with the Federal Trade Commission.
If Hertz does make an offer now, it would be much higher than the $1.2 billion it started off with in April 2010.
"The longer Hertz waits to wrap this up, the more expensive it is going to be for them," said Roy Behner, co-chief investment officer at Westchester Capital, Dollar Thrifty's third biggest shareholder.
Behner said an offer in the mid-$80s would be a good starting point for negotiations.
Uncertainty at Dollar Thrifty
Dollar Thrifty said media reports on possible asset sales by Hertz have caused uncertainty for its employees and business partners, and that it has relayed its concerns to senior officials at the Federal Trade Commission.
Dollar Thrifty CEO Scott Thompson said on a conference call that a few employees have left the company because of the uncertainty regarding a potential acquisition.
"At some point in time, we need to move forward," Thompson said. "Certainly, it has slowed down what we would be doing from a return-cash-to-shareholder prospective."
Dollar Thrifty has been aggressively buying back shares since it halted the sale process.
It bought about $127 million worth of shares so far this year and had about $273 million remaining at the end of June under its current share repurchase program.
"We continue to evaluate all alternatives for maximizing shareholder value, including the rationalization of the capital structure through share repurchases or other means," CEO Thompson said.
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