Hertz Global Holdings said on Friday it would not raise further its offer for Dollar Thrifty, a day after rival Avis Budget outbid Hertz again in the battle for gaining control over the smaller car rental firm.
In a statement, Hertz said its raised bid earlier this month — currently worth about $1.44 billion — was its "best and final" offer.
On Thursday, Avis Budget, which is trying to wrest Dollar Thrifty away from Hertz, raised its bid to about $1.51 billion, or $52.71 per share, based on Thursday's closing price of Avis, but refused to include a break-up fee.
Dollar Thrifty has rejected Avis' two previous bids on worries that Avis may not be able to close its bid for antitrust reasons.
"It's a smart move by Hertz," said Avondale Partners analyst Fred Lowrance said. "Hertz's offer is good enough to get approved by shareholders."
Hertz and Avis have been sparring over Dollar Thrifty since April. Low-cost brands like Dollar Thrifty — one of the few major car rental companies to post a profit in 2009 — have become increasingly important in the rental industry as consumers try to save money in tight economic times.
Both companies have begun the process of obtaining antitrust approval. But Hertz is thought to have a clearer path because it mostly focuses on more expensive segments of the car rental market. Avis already has a budget brand that competes with Dollar Thrifty.
"We have antitrust clearance in Canada, unlike Avis, and our progress with the U.S. government makes us highly confident that we can close the transaction in a timely manner within the framework of our merger agreement," Hertz CEO Mark Frissora said in a statement Friday.
Hertz also said it was confident of getting Dollar Thrifty shareholders' approval for its offer.
Several investors have voiced their opposition to the Hertz deal saying it undervalues the company but the Dollar Thrifty management has preferred Hertz to Avis citing certainty over deal closure.
Northcoast Research analyst John Healy said the gap between investor expectations and what Hertz was willing to pay has narrowed dramatically over the last few weeks.
"I think there is a higher likelihood of a Hertz deal getting approved today than it was a month ago," said Healy, adding that it was still difficult to predict the outcome of the shareholder meeting.
Dollar Thrifty's shareholder are set to vote on the Hertz deal at a meeting scheduled for September 30.
Avis has suggested that Dollar Thrifty should hold its shareholder meeting only after the Federal Trade Commission completes its review of both offers.