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Hertz agrees to buy rival Dollar Thrifty for $1.2B
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52 mins ago
NEW YORK – 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.




Does anyone expect any of the benefits of Hertz to go over to Dollar or Thrifty?

jbcarioca

Interesting that so far these mergers seems to leave the old brands intact. I have trouble understanding why. They should have been economies by shutting down some of the weaker ones. The busses now look a trifle odd with multiple names. I hoep they eliminate a couple fo them. Alamo, Avis and Hertz work, they could all junk the others, could they not?

I know somebody will want to flame away over the loss of national Emerald Aisle or Budget or another. really, though aren't there a few too many brands?

notquiteaff

They should've bought DTG for $2/share a year ago.

Are there really 1550 locations that have Dollar or Thrifty but not Hertz?

Dovster

I'm surprised to learn that there are any locations which have Dollar or Thrifty but not Hertz.

4now

This should be an interesting thread for me to follow.
A FT poster wrote of Delta, "If you can't be the best; at least you can be the biggest."
How is this decision going to help Hertz rent more cars to the public?
Or do you just have to be from Oklahoma to understand?

jbcarioca

Since Hertz was already the biggest what are the accomplishing? Somebody must have a better view than mine.

Dovster

They are getting rid of competition.

VT_hawkeye

Don't forget adding strong core competencies in areas such as lying to customers about credit card insurance coverage, leaving cars outstandingly nasty inside and out, and claiming "airport" service through a location in a post-apocalyptic industrial park five miles away.

spades097

They are not the biggest. Not even close to being the biggest! Enterprise took that title from them a long, long time ago. The last time I saw the numbers, Hertz had a fleet of about 250,000 cars whereas Enterprise had 500,000.

I absolutely think Hertz should maintain either Dollar or Thrifty. Hertz has never been known for cheap car rentals at airports. They try to be a premium brand. Dollar's customers are very different from Hertz' customers.

UAPremExecflyer

This is all about fleet integration and better utilization. Apparently Hertz rents 95% of its fleet during the week and only 30-40% on the weekend. Dollar/Thrifty is roughly the opposite. The new combined company will have 23% of the US market, well behind Enterprise at 53%. But ahead of Avis/Budget at 20%.

notquiteaff

Right, I couldn't think of one myself.

This CNN story defines the numbers differently:

http://www.cnn.com/2010/TRAVEL/04/26...ex.html?hpt=T2

"Hertz has 8,200 locations in 146 countries, while Dollar Thrifty has 1,550 locations around the globe."

But then they also say

'For Hertz customers who don't need the "bells and whistles" of higher-end cars, the deal opens the door to more value-oriented rentals, Abrams said, while giving Dollar Thrifty customers access to Hertz's worldwide system.'

My Hertz rentals haven't really had any bells and whistles. Well, maybe the exhaust pipe might have whistled a bit with the nearly 40k miles on the vehicle we got two weeks ago in LAS.

brendanm14

I laughed when I read that too....yeah the high end Toyota Corolla's with no keyless entry and 30,000+ mile Camrys certainly are high-end. I rented a new Buick Lacrosse from Dollar Thrifty back in November, they certainly have some pretty decent cars in their fleet.

cordelli

Personally I think it's about bringing two different rental models under one roof. Hertz has a good portion of it's rentals from the business market, or at least people renting on business. Dollar has a huge personal rental business. Hertz will now have way more people to draw from for cars that are sitting idol (and will probably get rid of quite a few, don't expect

number of cars in new company = number of cars (Hertz + Dollar + Thrifty)

It will also get them into a considerable number of airports they are not in, Hertz has counters in 26% of the airports, now they will have a presence in 38%.

That will not be a good thing, in airports (or other markets) where Hertz was competing only against Dollar for customers, you can expect that the rates will go up to Hertz levels, and not remain low at Dollars.

pinniped

It seems like anymore the fleets of all rental agencies are roughly equally bland. I just finished a National Executive Selection rental at SFO - it was stocked with Korean cars and GM's, with one Dodge Charger SXT sitting at the end of the line. While I enjoyed the Dodge enough, it was no different than anything I'd get at the off-brands. The Thrifty neighborhood location near me used to have a lot full of Chrysler products - including some of the big ones with Hemis.

I get the merger from the perspective of consolidating fleets and operations - especially if these particular agencies have such complementary utilization trends. We will soon be at the point where there are really 3 viable competitors. Hopefully that will still yield fair pricing in most locations.

notquiteaff

I wonder where all those airports are that have Dollar/Thrifty stations but not Hertz. Admittedly I mostly fly into larger airports, but the small ones I have been to (including tiny little Palmdale, CA while its UAX service was around) had Hertz/HLE stations and sometimes nothing else.

I assume they'll at some point start sharing resources/facilities like Alamo/National?