Ahead of the Bell: Avis outbids Hertz for Dollar

By EILEEN AJ CONNELLY AP Business Writer

NEW YORK (AP) - Shares of Dollar Thrifty Automotive Group Inc. slipped in premarket trading Thursday after the rental car firm became the subject of a tug-of-war between its two larger rivals, but at a price lower than the stock has been trading lately.

Late Wednesday, Avis Budget Group Inc. made a $1.33 billion, offer for the Tulsa, Okla., company in an effort to derail a planned takeover by Hertz's Global Holdings Inc.

The Avis bid, which was expected, values Dollar Thrifty at about $46.50 per share. That's below the stock's Wednesday closing price of $48.68, but about 20 percent higher than shares were trading in April, when Hertz said it would buy the company for about $1.17 billion in cash and stock, or $41 per share.

Dollar Thrifty said it is studying the Avis offer, but has already signed a definitive agreement with Hertz. Shareholders are scheduled to vote Sept. 16 on the deal, which carries a termination fee of $44.6 million, plus expenses, if Dollar Thrifty backs out.

Analyst Fred Lowrance of Avondale Partners is betting on Hertz to be the eventual winner. Hertz has the right under the agreement to match the Avis offer, he noted. "I think it's high enough above the Hertz offer that the Dollar board is going to have to take a serious look at it," Lowrance said. "I think there's going to be a little bidding contest."

Hertz has more incentive to combine with Dollar Thrifty, which would bring more consumers into its fold. Hertz, based in Park Ridge, N.J., is the largest of the three companies, but is now heavily focused on the business travel market. Avis, meanwhile, already has its Budget brand in the consumer segment of the market.

In premarket trading, Dollar Thrifty shares fell 8 cents, to $48.60. Avis shares gained 19 cents to $11.27. Hertz shares inched up 11 cents to $11.11.