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Richard J. Lambert was named by Best Lawyers® as a 2021 Corporate Law “Lawyer of the Year.”

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Avis v. Hertz in Dollar Thrifty Acquisition, Part 1

The Park Ridge, New Jersey-based rental car company, Hertz Global Holdings Inc., is waiting to see how much money Avis Budget Group Inc. will bid in a counter-offer in the two companies’ long-time battle to acquire Dollar Thrifty Automotive Group. People following the contentious competition say that it is likely the winning deal will come down to cash. If Avis bids significantly more than Hertz, it is likely Dollar will choose Avis, and Hertz will walk away from the dealings.

The resolution of the acquisition triangle rests mostly on the amount of the bid because, despite what they say, it seems both companies would have an equally difficult time getting a merger with Dollar approved by government regulators. Both a merger between Hertz and Dollar and Avis and Dollar would raise significant antitrust issues that government regulators would examine closely before any deal was approved. 

Dollar has been negotiating with both Avis and Hertz for the last three years for a merger with one of the companies, and one of the most challenging points of either deal has been how to win regulatory approval. In order to successfully aquire Dollar, either company would likely have to accept large divestitures and pay a break-up fee.

If Avis ends up winning in their bid to buy out Dollar, Hertz has a back-up plan. They will buy Avis’s divested assets and grow their Advantage Rent A Car unit. They will create an expanded leisure-travel brand for themselves whether with an acquisition of Dollar or by growing their budget unit with the purchased divested assets.

 

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