Hertz: M&A With A Brain

The president of PAR, which owns 7.7% of the shares in Dollar Thrifty (NYSE: DTR), told The Wall Street Journal that his fund will vote against a Hertz offer to buy the smaller company. The cash and stock offer is worth about $51 a share.

Hertz has said that it will call off the deal if Dollar Thrifty shareholders do not approve it.

Avis (NYSE: CAR) has made a slightly higher offer for Dollar Thrifty, but that offer is in limbo until a vote by Dollar Thrifty shareholders.

The Hertz announcement is one of the few sane proclamations in what has become a period of frenzied M&A activity. Many companies that have made offers are willing to pursue them against stiff odds and in some cases will raise offers to box out rivals.

BHP Billiton (NYSE: BHP) is hell-bound to complete a transaction for Potash (NYSE: POT) even at a price well above where the Canadian company traded just a few weeks ago. Dell  (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) engaged in a furious bidding war for 3PAR that raised the price of the target again and again until it reached a nearly insane level compared to the balance sheet and profits of the company.

Hertz is an example, albeit a rare one, that the cheap money available to companies and the high stock prices of acquirers are not enough to take a deal to irrational extremes.

Douglas A. McIntyre