Hertz Global Holdings Inc.
), engaged in vehicle and equipment rental operations, announced a
definitive merger agreement with
Dollar Thrifty Automotive Group Inc.
) on August 26, 2012. Per the agreement, Hertz would pay $87.50 for
every Dollar Thrifty share in an all-cash deal of about $2.3
billion. Recently, Hertz started its cash tender offer to acquire
all outstanding shares of Dollar Thrifty.
Hertz proclaimed that after the closing of the cash tender
offer, every stockholder of Dollar Thrifty will receive $87.50 per
share in cash, excluding the interest amount and any withholding
taxes, provided the shares are properly tendered and not withdrawn
during the offer period.
Both the abovementioned companies have filed the necessary
documents to give effect to the transaction dealt by them. A
consortium of banks is acting as financial advisors to Hertz and
Management believes that the proposed deal with Dollar Thrifty
has a very strong potential and will transform the company into
multi-brand leader in car rental providers through its recognized
portfolio and value brands, which will offer customers a wide range
of sophisticated rental options.
Moreover, management has full confidence on this strategic
alliance and believes that the company can provide varied range of
rental options to customers globally via Dollar Thrifty vast
The deal will fetch various synergistic and growth opportunities
to Hertz, which will be accretive to its top line. Benefiting from
increased productivity, effective use of assets, better management,
the company forecasts $160 million annual cost savings.
Additionally, Hertz announced that it will divest its Advantage
business to Franchise Services of North America (FSNA) and
Macquarie Capital. Hertz will divest this business on the
successful completion of the tender offer with Dollar Thrifty.
During the first quarter of 2012, Hertz's equipment rental
division - Hertz Equipment Rental Corporation (HERC) - completed
the acquisitions of Cinelease and Arpielle. Management believes
that the acquisitions have already started paying off through
incremental revenue growth, which led to increased profits.
Hertz, which competes with
Avis Budget Group Inc.
), carries a Zacks #3 Rank, translating it into short-term Hold
rating for the next 1-3 months and correlates with our long-term
'Neutral' recommendation on the stock.
AVIS BUDGET GRP (CAR): Free Stock Analysis
DOLLAR THRIFTY (DTG): Free Stock Analysis
HERTZ GLBL HLDG (HTZ): Free Stock Analysis
To read this article on Zacks.com click here.