But Dollar Thrifty still has some cards up its sleeve to leverage a higher price out of Hertz - mainly little debt and a ton of cash, which they could use in a large share repurchase to drive up the stock price.Īlso, Avis Budget Group is not necessarily out of the picture. You might think that because Avis is busy acquiring Avis Europe, Dollar Thrifty is at a disadvantage in any deal negotiations. On the other side, the Dollar Thrifty board of directors and shareholders are looking for the highest price possible, though those two entities often don't agree. In Wall Street-speak, Hertz is looking to close the transaction that is reasonable and "meaningfully accretive on an earnings basis." Hertz wants to show their investors they didn't overpay and will add to earnings in year one. The money guys get paid the big bucks to understand the multiples to earnings to come up with a fair share purchase price. The next order of business is coming up with an acceptable share price for a deal. There is no time lock on completing a deal to sell Advantage, but you would think Hertz would be intent on getting Advantage off its books to be able to move on to bigger fish. But the devil, as they say, is in the details. The consensus on an FTC ruling is that Hertz should have an easier threshold to pass than an Avis Budget deal on combined market shares at airports. In terms of FTC approval, the players in this process have been expending resources for more than a year, and judging by the fact that the process is continuing shows that the outcomes are at least workable.
That leaves us with our final question (at least for now). This means we'll most likely encounter a flood of information all at once: a merger deal, an Advantage buyer and any FTC ruling outcomes, if Hertz or Dollar Thrifty cares to divulge. Being able to close the Dollar Thrifty deal is contingent upon Hertz's ability to sell Advantage, and selling Advantage is contingent upon having a signed merger agreement and shareholder approval from Dollar Thrifty. The FTC, it seems, wants Advantage around.Īnother wrinkle: Hertz won't sell Advantage and hope that a Dollar Thrifty deal will go through. Also, as Advantage is only "near airport" in many markets, the FTC is apparently asking Hertz as part of the divestiture package to allow Advantage on-airport counter space in certain markets. The FTC will want assurances that the buyer is committed to keeping and growing Advantage as a viable car rental brand.
The FTC will review the Advantage buyer as well, which could lengthen the timeline. Meanwhile, Hertz has yet to announce a buyer for Advantage, though the suitors have been narrowed down from many to a few or even one. When it comes to a Federal Trade Commission (FTC), ruling if you're like me, you've been scratching your head and thinking, "What's taking so long?" Know first that the FTC asks all the questions and has no obligation to announce its rulings publicly.īut what pound of flesh does the FTC want for a Hertz/Dollar Thrifty merger? Is it a market-by-market divestment of revenue if the combined company controls more than 45 to 50 percent of the airport business? Divesting Advantage is certainly part of the deal, but will Hertz have to give up airport desks in any given city? The outcome of this process would take a couple of months if everything got going today. The filing is standard procedure and not necessarily contingent upon having an Advantage buyer in place, though it's a step in the right direction to show Hertz wants to make a deal.Īfter approval of the HSR, then Hertz will approach Dollar Thrifty's board and try to talk to Dollar Thrifty's major shareholders at the same time to see what price works.
The notification requires a 30-day waiting period, after which regulators may request more time to review additional information. In mid-July Hertz filed a Hart-Scott-Rodino notification, which is a step in the process to allow the federal antitrust authorities to vet the Dollar Thrifty deal. Hertz needs to find an Advantage buyer, comply with the FTC and structure a deal that will work with Dollar Thrifty's board of directors as well as its major shareholders.Īs of now there are no formal agreements in place involving any party. As always, there are many moving parts to disentangle.
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