Vehicle rental services provider Avis Budget Group, Inc. (CAR) lifted Thursday the cash portion of its offer to acquire rival Dollar Thrifty Automotive Group, Inc. (DTG) to $40.75 per share from previous offer of $39.25 per share. Meanwhile, the stock option in the offer of 0.6543 shares of Avis stock per Dollar Thrifty share remains the same.
The company stated that its offer is clearly superior to the Hertz Global Holdings, Inc.'s (HTZ) $41 per share offer, citing that it is offering a substantially higher price and a more meaningful divestiture commitment.
Avis Budget pointed out that the Hertz deal is no more likely to be approved by the FTC simply because Hertz agreed in the context of a negotiated deal to pay a fee to Dollar Thrifty if it is not approved. Meanwhile, both deals raise complex and similar antitrust issues and face comparable divestiture analyses.
Avis Budget said it is committed to sign proposed merger agreement following rejection of Hertz definitive merger agreement by Dollar Thrifty shareholders at the September 16 special meeting.
Hertz's bid that was signed on April 25 valued Dollar Thrifty at $1.2 billion. Avis Budget's new offer of $40.75 in cash and 0.6543 shares of its stock, represents a premium of more than 22% over the Hertz offer.
The company also said that it will increase offer to Dollar Thrifty shareholders by the amount of any reduction in the Dollar Thrifty break-up fee payable or paid to Hertz.
Avis Budget's previous offer, which was received by Dollar Thrifty in late July, carried a total cash and stock value of $46.50 per share, but was 4.48% lower than Dollar Thrifty's then closing stock price. Tulsa, Oklahoma-based Dollar Thrifty then had said its board of directors would review and consider the terms of the Avis Budget offer.
Avis Budget noted that the revised offer would include the proceeds of a pre-closing special dividend to be paid by Dollar Thrifty consistent with the company's previous proposal.
In the offer, Citigroup and Morgan Stanley & Co. Inc. are acting as financial advisors to Avis Budget Group, and Kirkland & Ellis LLP and Arnold & Porter LLP are acting as legal counsel.
CAR closed Wednesday's regular trading session at $9.75, up $0.63 or 6.91%.
DTG is currently trading at $47.65 in pre-market activity, up $0.16 or 0.34%.
HTZ settled at $9.09 on Wednesday, up $0.58 or 6.62%, while slipped in the after-hours trading to close at $8.52.
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