Dollar Thrifty to pursue "stand-alone" plan

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http://www.tulsaworld.com/news/article.aspx?subjectid=298&articleid=20111010_298_0_Shareh162273
Shareholders of Dollar Thrifty may have to wait a little longer to learn the fate of their company or potential offers for the Tulsa-based rental car operator.
Despite a self-imposed Monday deadline for submission of final written offers for Dollar Thrifty Automotive Group Inc., company executives said they received no bids. "We did not receive a compelling offer, and we are going to drive forward with our stand-alone plan," CEO Scott L. Thompson said. "It was not a surprise. Avis dropped out a few weeks ago ... and Hertz said they needed more time.

"We have not told employees yet, but I'm sure employees will be very supportive of the board's decision to move forward on a stand-alone plan and get rid of these distractions."

Final offers for Dollar Thrifty were due at 4 p.m. CST Monday.

After enduring 18 months of uncertainty and spending an estimated $20 million completing regulatory and merger inquiries, Dollar Thrifty advised suitors Hertz Global Holdings Inc. and Avis Budget Group Inc. last month that the company would welcome their final offers by Oct. 10.

"The purpose of setting a deadline for submission of bids was to bring clarity to the next steps for the company," Thompson said. "As we said all along, continuing uncertainty is in no one's interest. While Hertz's May exchange offer remains outstanding, and on Oct. 7 Hertz's CEO (Mark Frissora) called me personally to reaffirm their commitment to pursuing the acquisition of Dollar Thrifty, the fact remains that they have not made a proposal that addresses our board's requirements.

"Having received no acceptable offer after conducting an unprecedentedly open process with clearly articulated requirements, it is time for us to move forward on a stand-alone basis."

Park Ridge, N.J.-based Hertz, the nation's second largest rental car company after Enterprise Holdings Inc., wants to shore up its position by acquiring fourth-ranked Dollar Thrifty's value brands, industry analysts say.

In May, Hertz offered Dollar Thrifty shareholders $72 per share, a bid worth about $2.25 billion, for the company.

Dollar Thrifty said in letters to Hertz and Avis Budget last month that potential acquirers should state the purchase price, the mix of cash and stock making up the purchase price, how the deal would be financed, and regulatory approvals or divestitures that would be required to complete the transaction.

The Tulsa company also requested potential acquirers describe what the merged company would look like after the transaction is completed.

Dollar Thrifty employees, the Tulsa Metro Chamber and Tulsa civic and business leaders have been particularly concerned about the post-merger shape of the company in Tulsa. Many local officials believe a deal with Avis Budget, which has a substantial presence in Tulsa, would be more favorable to Dollar Thrifty employees and the city.

But the preferences for an Avis Budget offer became moot last month when the Parsippany, N.J.-based company said it was halting efforts to acquire Dollar Thrifty in light of current market conditions and its agreement to acquire Avis Europe plc for $1 billion.

Dollar Thrifty executives said Monday the company will begin its previously announced share repurchase program after the third quarter earnings are released on Nov. 1. The Dollar Thrifty board has authorized the repurchase of up to $400 million of company shares.

Dollar Thrifty executives also said they expect third quarter rental revenue will be up about 2 percent compared with 2010's third quarter. Third-quarter corporate adjusted earnings before interest, taxes, depreciation and amortization — EBITDA — excluding merger-related expenses, is expected to range between $110 million and $120 million, compared with third quarter 2010 EBITDA of $93.7 million, company officials said.

"It is also important to emphasize that Dollar Thrifty is well positioned for these uncertain times, as rental car customers become even more value focused," Thompson said. "Our long established value brands combined with our low operating cost and solid balance sheet are serving us well. We are on track for another record year."

Dollar Thrifty shares closed Monday at $60.40, up 73 cents.

Hertz shares rose 44 cents, closing at $10.08, while Avis Budget shares were up 61 cents, closing at $11.22

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That is good news. 

[Conan71]

Dollar Thrifty shares closed Monday at $60.40, up 73 cents.

That makes Dollar Thrifty about a hundred-bagger now, doesn't it?