Hertz Global Holdings Inc. (HTZ) plans to sell around a dozen car rental locations at U.S. airports to ease concerns of U.S. regulators about its proposed $2.3 billion acquisition of Dollar Thrifty Automotive Group Inc. (DTG), the Wall Street Journal reported Sunday.
The Federal Trade Commission is worried that a wave of consolidation in the rental car industry will hurt customers as the combinations could limit competition and manipulate pricing. The FTC has time until Friday to block or approve the merger deal.
The combination of Hertz and Dollar Thrifty would bring down the number of competitors in the $23 billion rental-car industry to three, compared to nine companies more than a decade ago.
Hertz has more than 3900 airport and non-airport locations in the United Sates, while Dollar Thrifty has about 585 locations in the U.S. and Canada.
Hertz said in late August that it agreed to acquire smaller rival Dollar Thrifty for $87.50 per share in an all-cash deal valued at about $2.3 billion. The deal, which was approved by the boards of directors of both companies, is expected to close in the fourth quarter of fiscal 2012.
As part of a deal with the FTC to obtain antitrust clearance, Hertz was required to divest its Advantage Rent-A-Car business, which it agreed to sell to Franchise Services of North America and Macquarie Capital.
The acquisition will primarily boost Hertz's operations outside the U.S., particularly in Europe and other markets, given Dollar Thrifty's strong international presence.
The combination is also anticipated to create at least $160 million of annual cost synergies that are expected to be fully achieved over two years, in addition to sales growth opportunities.
The deal was finally struck after several sweetened offers and change in the offer from a cash and stock deal to an all-cash deal, with strong rival bids coming in from another car rental services provider Avis Budget Group, Inc. (CAR). However, Avis dropped out from the long-drawn battle in September 2011, citing then market conditions.
Hertz had earlier failed to complete an agreed deal of $50.25 per share with Dollar Thrifty in September 2010 after shareholders of Dollar Thrifty voted against the deal.
In Monday's regular session, HTZ is trading at $14.75, up $0.41 or 2.93 percent on a volume of 544,919 shares.
DTG is trading at $85.96, up $1.96 or 2.33 percent on a volume of 830,127 shares.
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