Sunday, April 25, 2010

Hertz to buy Dollar Thrifty, with (partly) Dollar Thrifty's own cash! (DTG, HTZ)

(Sunday 10:37pm PST) Car rental giant Hertz (HTZ) announced that they will acquire Dollar Thrifty (DTG) for $41 per share in cash, for a "a 19% premium to the 30-day average closing price of Dollar Thrifty's common stock."

Oh how nice. Dollar Thrifty shareholder might point out that the offer is only a 6% premium from last Friday's close, but hey! - that doesn't sound as respectable in a press release.

Dollar Thrifty President and CEO Scott Thompson kept it short and sweet:
Scott L. Thompson, Dollar Thrifty's President and Chief Executive Officer, said, "The combination of Dollar Thrifty with a larger company like Hertz will provide Dollar Thrifty with greater resources and the technology needed to expand our value focused leisure brands. We see the combination of our brands with Hertz's brands as very compelling."
I'd keep my words to a minimum too, had I just agreed to a deal to sell my company, funded in part with $200million of my own shareholders' cash:

From the release:
Under the terms of the definitive agreement, the $41.00 per share purchase price is comprised of 80% cash consideration and 20% stock consideration. The cash portion will be paid in two components; (1) a $200 million special cash dividend representing approximately $6.88 per share, to be paid by Dollar Thrifty immediately prior to the transaction closing and (2) $25.92 per share to be paid by Hertz at the closing. The stock is at a fixed exchange ratio of 0.6366 per share, based upon a Hertz common stock closing price of $12.88 per share on April 23, 2010. The $41.00 per share purchase price represents approximately a 19% premium to the 30-day average closing price of Dollar Thrifty's common stock.

On the positive side, the stock portion of this deal might increase the offer slightly when trading opens tomorrow. Given the shrewd pilfering of Dollar Thrifty's balance sheet, Hertz shares might get a warm reception...

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