Hertz Global Holdings agreed to buy rival Dollar Thrifty Automotive Group for about $2.56 billion in a deal that puts the combined company's share of the U.S. car rental market at around 25 percent.
Dollar Thrifty will give Hertz more ways to attract travelers and expand its international presence. It will also give the company a leg up against competition from an increasing number of smaller competitors.
At $87.50 per share, the deal is worth far more than any of Hertz's previous bids and about 8 percent higher than Dollar Thrifty's closing price Friday.
Hertz caters to customers seeking high-end vehicles and service; Dollar Thrifty and Hertz's Advantage business compete toward the lower end of the market.
With the long coveted acquisition of fourth-ranked Dollar Thrifty, Hertz would further cement its lead over Avis while narrowing the gap with market leader Enterprise Holdings, which owns Enterprise along with the Alamo and National brands.
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.
Around 95 percent of the U.S. car rental market will be controlled by these three companies, following the deal.
In an interview Monday with The Associated Press, Hertz Chairman and CEO Mark P. Frissora said this deal will help it fight against a growing number of small regional rental companies popping up in airports across the country. He said those competitors, along with European rivals like Germany's Sixt doing more U.S. business, will likely cause the rate wars to continue for now.
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.
