NEW YORK — Hertz is one-step closer to its long-awaited prize.
More than two years after its original bid, it agreed Sunday to buy Dollar Thrifty Automotive Group Inc. for about $2.3 billion.
At $87.50 per share, the deal is worth far more than any of Hertz’s previous bids.
Nothing will change immediately for consumers. Travelers that rent through Dollar Thrifty still will visit that counter for service. In the long run, prices in many markets will almost certainly rise as the two companies streamline their operations.
Both rental companies have grown stronger and more valuable in the years since they first considered teaming up. Both stocks have almost doubled in value, and they’ve reported robust quarterly financial results as the volume of car rentals soared. But still-fierce competition has prevented the industry from raising prices, which has dragged on revenue. Fewer big competitors mean a better chance of higher rates.
The push-and-pull between two of the nation’s largest car rental companies started in 2010. Avis Budget Group was also in the mix, pursuing a bid for Dollar Thrifty for more than a year. Avis dropped its bid nearly a year ago citing market conditions. Then, in October of last year, Hertz dropped its bid, too. But Dollar Thrifty didn’t trust that the years of attempts were over. In February, it extended its shareholder rights plan known as a “poison pill” — a maneuver designed to deter any unsolicited attempts to take over the company — through May 2013.
More recently, it appeared Dollar Thrifty was open to another bid. Earlier this month, it urged for either a “compelling offer” or an end to the “constant distraction of merger speculation.”
Then last week, media reports said that Hertz Global Holdings Inc. of Park Ridge, N.J., was considering a new bid for Tulsa, Okla.-based Dollar Thrifty.
Hertz expects that the acquisition will save it at least $160 million a year, while providing the opportunity for increased sales.
Both Hertz and Dollar Thrifty’s boards have unanimously approved the deal, which still needs antitrust clearance from the Federal Trade Commission. Hertz said it has stayed in close contact with the FTC to secure clearance and that Dollar Thrifty will fully cooperate with the process.