Mary DiBiase Blaich for The New York TimesDollar Rent-a-Car at Newark Liberty International Airport.
10:58 a.m. | Updated The Avis Budget Group, which made an offer last year for Dollar Thrifty, is walking away from its bid, potentially paving the way for Hertz Global.
On Wednesday, Avis Budget announced in a filing that it is bowing out of the bidding process, citing current market conditions.
The decision comes less than a month after Dollar Thrifty called on Avis and Hertz to submit their “best and final” offers. At the time, Hertz had the superior bid, with a cash-and-stock offer valued at $1.91 billion — significantly higher than the Avis bid of about $1.55 billion.
Dollar Thrifty has been trying to complete a deal for some time. Hertz, which started discussions with Dollar Thrifty in 2009, first submitted a bid of $41 a share back in April 2010. In the bidding war that followed, Avis moved the needle higher, upping its offer to $53 in cash and stock by late September. Initially, Hertz balked at raising the price once more, calling its then $50 bid, its “best and final” offer. With Avis’ proposed offer on the table, Dollar Thrifty shareholders swiftly rejected Hertz’s bid.
But the road to the altar was a troubled one for Avis and Dollar Thrifty, with significant antitrust hurdles. In a joint statement, submitted in October, Avis “reaffirmed its commitment to diligently pursue antitrust clearance,” and said it would not “not commence an exchange offer at this time, as the parties work cooperatively with the antitrust authorities.”
One of the major challenges, according to an earlier column by DealBook’s Stephen M. Davidoff, was whether the Federal Trade Commission would pursue a narrow or broad definition of the acquisition’s market. If regulators defined the deal’s market as the airport car rental market, Avis would struggle to get clearance, since its airport business significantly overlaps with Dollar Thrifty’s.
But as Avis wrestled with regulators earlier this year, Hertz was hatching a plan to get back in the game. In May, the rival returned with a higher cash and stock offer, then valued at $72 per share.
The following month, Avis repurchased its European arm, Avis Europe, for $1 billion — a move that many analysts interpreted as a sign that Avis was planning to withdraw its bid for Dollar Thrifty.
In its filing submitted on Wednesday, Avis said it was abandoning the deal, despite “having made significant progress toward obtaining U.S. regulatory clearance for the acquisition of DTG.” With its competitor out, Hertz is plowing ahead with plans to acquire Dollar Thrifty. “We will continue to pursue an FTC consent decree enabling Hertz to advance its effort to acquire Dollar Thrifty,” a spokesman said in an e-mail to DealBook on Wednesday.
Article source: http://dealbook.nytimes.com/2011/09/14/avis-abandons-bid-for-dollar-thrifty/?partner=rss&emc=rss
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