A Premium Bidding War in Rent Car Merger (DTG, CAR, HTZ)

Dollar Thrifty Automotive Group Inc. (NYSE: DTG) is about to get a new bid, or so it seems.  Avis Budget Group Inc. (NYSE: CAR) is expected to jump in and make a rival offer that would compete against a bid on the table from Hertz Global Holdings Inc. (NYSE: HTZ).  With the merger trading at a premium, something is about to happen either way.

The existing terms of the merger on the table from the April offer is $1.2 billion or $41.00 per share.  Dollar Thrifty shares are up 1.4% today, but the stock is at $46.75.  This merger trades at more than a 10% premium to the deal on the table now.

It seems that it will be Hertz that effectively gets the right to match any new deal.  Even if it did not have the right, there is nothing preventing a third party from trying to step in if a target makes financial sense.  Avis already telegraphed a higher bid was coming.

This is a merger we have been tracking because of sector consolidation.  CNBC’s David Faber said that a rival bid could be as soon as Thursday.  As far as whether or not that really occurs, this was according to people familiar with the deal.

Keep in mind that Dollar Thrifty Automotive Group Inc. (DTG) has a 52-week range of $15.54 to $52.05. Avis Budget Group, Inc. (CAR) is up 0.4% at $10.37, and its market cap is $1.06 billion and the range is $8.57 to $11.93.  Hertz Global Holdings, Inc. (HTZ) is up just over 4% at $10.44 with a $4.3 billion market cap and its 52-week range is $8.55 to $15.60.

Normally we would count this as a rumor because it is pending and still hearsay at this point.  The difference here is that a premium is already priced in.

JON C. OGG