The Work

May 10, 2011 5:15 PM

Hertz Launches Renewed Bid to Acquire Dollar Thrifty

Posted by Tom Huddleston Jr.

UPDATE: 5/11/11, 3:20 p.m., Information regarding Simpson, Thacher & Bartlett's representation of Dollar Thrifty's financial advisers has been added to this post.

Hertz Global Holdings, Inc.--the largest publicly traded auto renter--announced on Monday that it has upped the ante for Dollar Thrifty Automotive Group, Inc., with a $2.24 billion bid. Hertz's renewed offer is substantially higher than the one currently under regulatory review from competitor Avis Budget Group, Inc.

Hertz's $1.44 billion bid for Tulsa, Okla.-based Dollar Thrifty was rejected last September, Bloomberg reports, as Dollar Thrifty shareholders voiced disapproval of the offer. Meanwhile, Avis--the U.S.'s third-largest car rental company--offered $45.79 and 0.6543 of its shares for Dollar Thrifty last year, Bloomberg says, but the two companies have hit a roadblock in regulatory discussions with the Federal Trade Commission (FTC).

With that process dragging on, Hertz is taking the opportunity to best Avis' offer with a bid of $72 per Dollar Thrifty share. That price, which is based on Hertz' May 6 closing price, represents a 24 percent premium over Avis' proposal. Hertz' offer--comprised of $57.60 in cash per share, along with 0.8546 Hertz shares--is also a 26 percent premium over Dollar Thrifty's 90-day average share price.

Cravath, Swaine & Moore corporate partners Scott Barshay and Minh Van Ngo have signed on to advise Park Ridge, N.J.-based Hertz on its bid. Compensation and benefits partner Eric Hilfers and tax partner Michael Schler are also advising.

As previously reported, Hertz has retained Debevoise & Plimpton M&A partners John "Jack" Allen, Jr., Jonathan Levitsky, and William Regner. The firm's team also includes tax partner Gary Friedman and securities partner Steven Slutzky. Allen has previously advised the company on a number of corporate work, including its acquisition by three investment firms, in 2005, as well as its 2006 IPO.

Hertz is looking to Jones Day partners Joe Sims and Michael Knight and of counsel Ryan Thomas for antitrust advice.

Antitrust issues could prove to be the lynchpin in Hertz's bid, as the company said in its announcement that it already has begun discussions with the Federal Trade Commission concerning approval for an acquisition of Dollar Thrifty. Hertz also is moving forward with a plan to divest its subsidiary, Advantage Rent A Car, in order to expedite the required approvals, according to the company's press release. Hertz's chief executive, Mark Frissora, has said these steps should give his company a leg up in the regulatory process.

"We have always known that antitrust considerations would be pivotal in any transaction with Dollar Thrifty, and that a combination of Avis Budget and Dollar Thrifty would face serious antitrust obstacles," Frissora said in a statement. "Avis Budget has been unable to produce a viable antitrust remedy, despite an entire year of discussions with the FTC with no end in sight."  

Dollar Thrifty has engaged Cleary Gottlieb Steen & Hamilton as counsel on its proposed sale, as we reported last April. Leading the way for Cleary now are M&A partners Paul Shim and Matt Salerno, while partners David Gelfand and Jeremy Calsyn are advising on antitrust matters. 

J. Jeffrey Zimmerman serves as general counsel for Hertz, while Dollar Thrifty's top in-house lawyer is Vicki Vaniman.

Sullivan & Cromwell M&A partners Keith Pagnani and George Sampas are representing Hertz's financial advisers on the bid, Barclays and Lazard. Dollar Thrifty's financial advisers--Goldman Sachs and JP Morgan--hired Simpson Thacher & Bartlett corporate partner Brian Stadler as counsel.

As previously reported here, Avis has turned to teams from Kirkland & Ellis and Arnold & Porter for legal advice during its attempt at picking up Dollar Thrifty.

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