Hertz Global Holdings Inc. (HTZ) has again extended the expiration date for its $87.50 per share offer to buy all of the outstanding shares of Dollar Thrifty Automotive Group Inc. (DTG). The deal is valued at $2.6 billion. Except for the tender offer expiration, the terms and conditions of the deal were not changed.
The offer was slated to expire on November 5 at 5:00 PM ET, but has been pushed-out to November 16 at 5:00 PM ET. The first deadline was October 31, 2012.
Hertz, the U.S.’s second largest car-rental company by fleet size, reported that approximately 8.9 million common shares of Dollar Thrifty have been tendered as of the close of business on Friday, November 2. The figure is down from the 9.02 million shares that Hertz said were tendered back in October. The latest figures accounts for about 32 percent of the Dollar Thrifty shares outstanding.
Part of the hold-up with shares being tendered by Dollar Thrifty shareholders is likely because the Federal Trade Commission has still not approved the transaction. The latest extension moves the deadline to the same day agreed upon for the FTC to finish its review of the merger and make a decision.
Park Ridge, New Jersey-based Hertz has been trying to by Dollar Thrifty for more than half a decade, but the FTC has concerns about market control. A report earlier this year by IBISWorld said that Hertz, Enterprise Rent-A-Car and Avis Budget Group (CAR) cumulatively control about 75 percent of the rental market. Dollar Thrifty controls about a 5 percent stake and no other company commands more than 1 percent of the market.
Trying to appease the FTC, Hertz agreed to sell its Advantage brand as part of the Dollar Thrifty acquisition, so as to not control too much of the budget portion of the leisure car-rental market.
Hertz has been pursuing Dollar Thrifty since 2007 and made its first formal bid to buy the Tulsa, Oklahoma company in 2010 for about $1.2 billion, but DTG shareholders rejected the offer. A later offer by Hertz was rescinding by the company, citing general market conditions.
Last week, Scott Thompson, chief executive at Dollar Thrifty, said that he would be “surprised” in the FTC didn’t approve the merger by Hertz; commenting that the regulatory agency would be “standing in the way of the industry becoming more cost efficient.”
In earnings reports last week, Hertz said that profits grew by 18 percent it the third quarter. Dollar Thrifty reported earnings falling by 17 percent, citing expenses attached to the possible merger and tighter profits on auto sales.
Shares of Hertz are trading flat early in Monday’s session, while shares of Dollar Thrifty have slid about 1 percent just after the opening bell.