Avis Budget Group Inc. has thrown a wrench in what was an ongoing negotiation between Hertz Global Holdings Inc. and Dollar Thrifty Automotive Group. Both Hertz and Avis are looking to buy out Dollar Thrifty, a business acquisition that will change the face of the rental car business.
Serving as a surprise to New Jersey-based Hertz, what they thought was a pretty solid deal between Dollar Thrifty and their company has come to a disappointing halt. On May 3, Avis apparently presented Dollar Thrifty an offer they could not ignore, and now Dollar Thrifty has some reconsidering to do regarding recent business discussions with Hertz and the future of their company.
If Dollar Thrifty backs out of their acquisition negotiation with Hertz, experts say Hertz will lose out on the leisure rental market that Dollar Thrifty would bring them through the deal. A spokesman for Hertz says that they will push on in order to try and carry out their deal with Dollar Thrifty.
He suggests that an acquisition between Dollar Thrifty and Avis is unlikely due to the anti trust risks (the limiting of the competitive market) that the deal would present. Avis already gets a great deal of their business from leisure travelers, and combining the two rental car companies that currently serve that market would challenge the American business basis of the free market when it comes to leisure travelers’ car rental options.
If Dollar Thrifty ultimately does back out of their preliminary deal with Hertz, it would be because Avis gives them an incredible offer. The offer would have to be worth the reported $44.6 million break up fee as well as the reimbursement of any money that has already gone into the Dollar Thrifty/Hertz transaction, as previously agreed upon between those two companies.
As of now, it sounds like Dollar Thrifty has a lot to think about and some important numbers to crunch, but we will keep you posted on the progression of this car rental acquisition triangle. Stay tuned.
Dollar Thrifty Open to Avis Offer After Agreeing to Hertz Bid