Avis offers $1.33B for Dollar Thrifty in effort to trump Hertz for rental car company

PARSIPPANY, N.J. — Avis Budget Group Inc. said Wednesday it has offered $1.33 billion in cash and stock for rival rental-car operator Dollar Thrifty Automotive Group Inc.

The bid is an effort to trump Hertz Global Holdings Inc., which in April said it was buying Dollar Thrifty for about $1.17 billion in cash and stock.

"In short, we believe that the higher purchase price we are offering, combined with the terms of our proposed merger agreement, makes our offer a superior one from the perspective of Dollar Thrifty and its shareholders," Ronald Nelson, Avis Budget's chairman and CEO, said in a letter to executives at Dollar Thrifty outlining the bid.

In response, Dollar Thrifty, which is based in Tulsa, Okla., said it will study the offer but noted it had already signed a definitive merger agreement with Hertz.

The latest bid consists of $39.25 in cash and 0.6543 shares of Avis Budget stock. It amounts to $46.50 a share for Dollar Thrifty, a price below the stock's Wednesday close at $48.68. It slipped 68 cents, or 1.4 percent, to $48 in after-hours trading.

The bidding war is part of an ongoing consolidation in the rental-car business that began in 2002, when Avis' parent company bought Budget.

When it announced its deal in April, Hertz, based in Park Ridge, N.J., said the Dollar and Thrifty brands would expand its reach among vacationers who rent cars at airports. Hertz's business is roughly evenly split between business and vacation travelers.

Avis Budget, based in Parsippany, had criticized Dollar Thrifty for not contacting it to discuss a rival bid even though it had expressed an interest in a deal. It also accused Dollar Thrifty of setting an unusually high breakup fee of 5.25 percent in order to deter competing bids. Nelson said his company's bid is more attractive because it does not include those conditions.