Hertz and Avis continue public fight over Dollar

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Car Rental News - 27/05/2010

 

Intense anti-trust scrutiny expected as both suitors plead the strengths of their proposals.

Two of America’s car-hire giants are locked in a Titanic battle over Dollar Thrifty Automotive Group, the USA’s number-four vehicle rental operation. Long-standing negotiations between Dollar and each of its suitors, Hertz and Avis, rest on more than just how much each is willing to offer Dollar Thrifty’s shareholders.

Any potential merger deal will face months of intense analysis by anti-trust lawyers, who will scrutinise the respective proposals for any risks to fair market competition. Dollar Thrifty shareholders, naturally enough, are hoping to get the most for each of their shares but the merger proposals need to provide mechanisms aimed at alleviating regulators’ concerns that prices will rise as a result of such a deal.

Dollar Thrifty has also been negotiating break-up fees, should any deal be obstructed by regulators on anti-trust grounds. The proposed mergers are garnering more headlines than normal because any deal would see the number of major competitors in the vehicle-hire industry drop from four to three.

Dollar Thrifty has also been trying to get potential merger partners to agree to shed exiting businesses and rental locations in a bid to placate regulators. Anti-trust analysis of proposals will attempt to ascertain if customers anywhere will suffer higher costs as a result of increases in market share produced from a merger.

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