April 2, 2023

DealBook: Hertz and Dollar Thrifty Announce a Merger Deal

10:52 p.m. | Updated Two giants of the rental car industry agreed to merge late on Sunday, as Hertz Global Holdings announced a deal valued at $2.3 billion for the Dollar Thrifty Automotive Group.

The agreement caps a multiyear pursuit by Hertz, one that survived a rival bid by the Avis Budget Group and a rejection by Dollar Thrifty shareholders of an earlier, lower offer.

Under the terms of the transaction, Hertz will pay $87.50 a share in cash through a tender offer for Dollar Thrifty stock. That represents an 8 percent premium to Dollar Thrifty’s closing price on Friday.

In an important component of the deal, Hertz said it would sell its Advantage Rent a Car discount unit to Franchise Services of North America, a car rental franchiser, and Macquarie Capital.

In a news release, Hertz’s chairman and chief executive, Mark P. Frissora, praised the deal. “We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy — but worthwhile — pursuit,” he said. “We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies.” He added: “We’ll be a stronger global competitive player with a full range of rental options not only in the U.S. but in Europe and other markets given Dollar Thrifty’s strong international presence.”

In the same release, Dollar Thrifty’s president, chief and chairman, Scott Thompson, said: “After three years of merger-related activity and speculation, I am pleased that we have reached a win-win transaction for both Hertz and Dollar Thrifty.”

The deal is just the latest within the car rental industry, which has experienced rapid consolidation in recent years. Dollar Thrifty, based in Tulsa, Okla., was widely seen as one of the few remaining attractive acquisition targets.

A former division of Chrysler that was spun off in 1997, Dollar Thrifty was nearly forced into insolvency in 2008. Since then, however, it has posted three straight years of rising annual profits, earning $159.6 million last year alone.

Hertz was for many years owned by Ford, which spun off the unit in a 2005 initial public offering. That same year, Hertz was acquired by a private equity consortium led by the Carlyle Group. In 2006, Carlyle again took Hertz public.

The deal between Hertz and Dollar Thrifty has been more than two years in the making, mired in discussions over price and uncertainty over the companies’ ability to win antitrust approval of a transaction. But both companies now believe that, with a concrete plan to sell Advantage, the deal will be blessed by the Federal Trade Commission.

Such is their level of confidence that no breakup fees are payable if the transaction fails, people briefed on the matter said.

Hertz first made a move to buy Dollar Thrifty more than two years ago for about $1.2 billion, or about $41 a share. The bid drew Avis into the race, setting off a heated competition.

Dollar Thrifty shareholders rejected Hertz’s first offer in September 2010, despite a sweetened price, in the face of significantly higher offers from Avis. But antitrust concerns were largely seen as a bigger problem for Avis: analysts viewed the company’s discount business as much bigger than Hertz’s and therefore harder to divest to win antitrust approval.

In June 2011, Avis instead agreed to buy its European arm for about $1 billion, a decision largely interpreted as a sign that the company had walked away from Dollar Thrifty.

And Hertz, despite having offered $2.2 billion in May of last year, also struggled to allay antitrust concerns. Hertz withdrew its offer last October, but maintained it was still interested in Dollar Thrifty — pending F.T.C. approval.

The two companies kept in touch, however, slowly making progress on both price and a solution to their antitrust problems.

Article source: http://dealbook.nytimes.com/2012/08/26/hertz-on-the-verge-of-buying-dollar-thrifty/?partner=rss&emc=rss

DealBook: Bristol-Myers to Buy Inhibitex for $2.5 Billion

Bristol-Myers Squibb agreed late on Saturday to buy Inhibitex, a maker of a hepatitis C treatment, for about $2.5 billion in cash, as major drug makers seek to bolster their pipelines with more profitable specialty products.

Under the terms of the deal, Bristol-Myers will pay $26 a share through a two-step merger, beginning with a tender offer. That represents an enormous 163 percent premium over Inhibitex’s Friday closing price.

A slew of big pharmaceutical companies have turned to mergers in recent years to plug holes in their drug pipelines, in large part to replace products that are set to face generic competition. Such companies are turning increasingly to smaller biopharmaceutical players developing specialized — and therefore hard to replicate — treatments.

In Inhibitex, Bristol-Myers will buy a company focused on antiviral products. Its main drug, INX-189, is an oral drug for hepatitis C that the company hopes will form the basis for simpler treatments of the disease.

Yet the deal poses an expensive bet by Bristol-Myers, which said that it expects the takeover to hurt its profitability for the next four years. Its earnings per share are expected to fall by four cents this year and five cents next year.

Inhibitex hasn’t proven profitable lately, reporting annual losses between 2008 and 2010. For the quarter ended Sept. 30, the company, based in Alpharetta, Ga., reported a $5.3 million loss atop $1.3 million in revenue.

Bristol-Myers said that it plans to finance its bid by drawing upon its existing cash hoard. Shareholders owning about 17 percent of Inhibitex’s stock have already agreed to support the merger.

Bristol-Myers was advised by Citigroup and the law firm Kirkland Ellis. Inhibitex was advised by Credit Suisse and the law firm Dechert.

Article source: http://feeds.nytimes.com/click.phdo?i=99780f515f276fd20648940425cbeef6

DealBook: Arch Coal in $3.4 Billion Deal to Acquire I.C.G.

Arch Coal said on Monday that it would buy the International Coal Group in a cash deal worth $3.4 billion that will create one of the world’s largest coal producers.

The combined company would have annual revenue of $4.3 billion on shipments of 179 million tons of coal — both thermal and steel-producing varieties — and employ about 7,400 people. It will also have reserves of 5.5 million tons, the second-biggest in the United States coal industry.

Steven F. Leer, chairman and chief executive of Arch, said the transaction would “extend our operating portfolio into every major U.S. coal-producing basin, and solidify our position as one of the industry’s lowest-cost producers.”

Earlier this year, Arch Coal lost out in the bidding for Massey Energy, the coal operator that had been troubled since an explosion last year at the Upper Big Branch mine in West Virigina. Alpha Natural Resources won Massey in a $7.1 billion cash and stock deal.

Arch is offering $14.60 for every International Coal share, 32 above I.C.G.’s closing stock price on Friday.

Both boards have approved the tender offer, which is set to commence in mid-May, and 17 percent of I.C.G. shares are already committed to the deal, which is expected to close in the second quarter.

Arch says it expects the deal will begin adding to its earnings per share by next year, with annual savings of up to $80 million.

Arch has obtained a bridge loan from Morgan Stanley and PNC, and plans to raise permanent financing by issuing debt and equity.

Arch was advised by Morgan Stanley and the law firm Simpson Thacher Bartlett, while International Coal was advised by UBS and the Jones Day law firm.

Article source: http://dealbook.nytimes.com/2011/05/02/arch-coal-to-acquire-icg-in-3-4-billion-deal/?partner=rss&emc=rss