Dollar Thrifty shares rise on raised Hertz deal

By Bijoy Koyitty

NEW YORK (BestGrowthStock) – Shares of car rental companies Dollar Thrifty Automotive Group (DTG.N: ) and Hertz Global Holdings (HTZ.N: ) rose a day after Dollar Thrifty agreed to a sweetened $1.56 billion offer from Hertz.

Dollar Thrifty shares rose more than 5 percent, topping the $50 per share mark offered by Hertz, indicating some shareholders expect an increased bid.

Hertz agreed to raise the value of its already agreed-upon takeover of Dollar Thrifty by more than 25 percent, boosting the cash portion of its bid by $10.80 per share.

The company is looking to fend off rival Avis Budget Group Inc (CAR.N: ), which has been looking to wrest Dollar Thrifty away from Hertz.

Avis’ most recent bid, currently worth around $47.83, was well above the previous Hertz deal, but Dollar Thrifty had voiced antitrust concerns.

Hertz had agreed in April to buy Dollar Thrifty for about $1.1 billion.

Fred Lowrance, an analyst with Avondale Partners, said some Dollar Thrifty shareholders may believe that Hertz’s latest offer is still not high enough.

“The $50 bid has now reached the low-end of a range which I would consider providing ‘fair value.’ Dollar Thrifty shares have typically traded between 6 and 8 times EBITDA in prior periods of strong earnings. The $50 bid is 6.2 times my 2011 EBITDA estimate,” Lowrance told Reuters.

Speaking about the possibility of a higher bid from Avis, the analyst said Avis has shown its intention to raise the bid even further if need be.

“Avis Budget is able to do it in terms of access to financing. They can go beyond the $50 mark. The company had already said it would further increase its offer if Hertz and Dollar Thrifty reduce the breakup fees they agreed to under their deal. That clearly shows their intention,” Lowrance said.

Hertz shares were up 7 percent at $10.76. Dollar Thrifty shares were up 5.3 percent at $50.55.

Avis Budget shares were up 6 percent at $10.83.

(Additional reporting by Michael Erman, editing by Matthew Lewis)

Dollar Thrifty shares rise on raised Hertz deal