Associated Press | Hertz Global Holdings Inc., the world’s
largest car rental company, said Monday it has agreed to buy rival
Dollar Thrifty Automotive Group for about $1.17 billion in cash and
stock. Hertz said the deal will give it an additional 1,550 additional
locations, boosting its total to 9,800. It said it will boost its
leisure rental business in Europe and elsewhere.
Hertz said its bid values Tulsa, Okla.’s Dollar Thrifty at $41 per share, a 5.5 percent premium to Friday’s closing price of $38.85. The offer is made up of 80 percent cash and 20 percent Hertz stock.
Recently, shares of Tulsa, Okla.-based Dollar Thrifty have been trading at their highest prices in almost three years. The stock was trading at $2 a little over year ago, and was valued at less than a dollar in early 2009 because of lower demand for rentals and falling resale prices for vehicles, along with the problems facing its main supplier, Chrysler.
Dollar Thrifty shares rose $1.65, or 4.3 percent, to $40 in pre-opening trading.
Dollar Thrifty will become a wholly owned unit of Hertz when the deal closes. Hertz, based in Park Ridge, N.J., expects the deal to start adding to profits immediately, and said it has already identified at least $180 million in potential cost cuts from combining the two businesses.
Hertz separately is reporting a smaller first-quarter loss. The company trimmed its loss to $150.4 million, or 37 cents per share, from $163.5 million, or 51 cents per share, a year ago. Excluding one-time costs Hertz said it lost 12 cents per share. Revenue rose 6 percent to $1.66 billion from $1.56 billion.
Analysts expected a loss of 13 cents per share and $1.62 billion in revenue, according to Thomson Reuters. Analyst estimates usually exclude one-time costs.
Hertz said U.S. rental car revenue rose 10 percent due to higher prices, an increase in business travel, and better results for its Advantage leisure brand.
Hertz is now expecting an adjusted profit of 43 cents to 45 cents per share in 2010, on $7.5 billion to $7.7 billion in revenue. It had forecast a profit of 37 cents to 39 cents per share excluding one-time items, on $7.4 billion to $7.6 billion in revenue.
Analysts had forecast 44 cents per share and $7.45 billion in revenue.
This buyout is **very** bad news for anyone who ever rents cars, whichever company you prefer. It was done for one reason and one reason only: to wipe out price competition. Since the 1980s, the feds have looked the other way at 99%+ of such “mergers.” Before that, they often shot them down. They should shoot this one down as well.
Hamjor is exactly right…I never use Hertz when there’s a cheaper option, and those options are usually Dollar/Thrifty. Unfair to create such a monopoly.
Welcome to Obama’s hope and change. How ya likin’ it so far?
It doesn’t seem to matter which party occupies the White House. Under Bush we had oil megamergers. Now a serious competitor is being snapped up by the high priced leader.
Not good.
I agree that this will create a smaller pool for us to choose from when it comes to renting cars. However, I found a little trick. Hertz tends to be more expensive than the other car rental companies, that is unless you use Hotwire. I rented a car from Hertz through Hotwire for $7.95 a day. If I went directly through Hertz’s website it was about 29.99 a day.
There’s always a way to beat the system..
Will I still be able to rent a Dodge Stratus?
Bigger is always better? Hertz has always been the most expensive of the rental agencies. Once the number of rental companies is reduced to about 3 big guys maybe some rent-a-wreck companies will open up to serve the common man.
Never, Never allow this merger. Hertz is a scam co. and this would not be positive for the population